Real Estate Development - Budget vs. Actual

This financial model has been built with a bit of a twist. Normally, I build assumption tabs that automatically populate a monthly and annual summary. However, for the purpose of trying to forecast the financials of a real estate development project, some new logic has been done to accommodate.

The template will be sent to you after purchase via your PayPal/purchasing e-mail. Note, this template is included in the 'real estate financial model bundle category' for a one-time fee of $85.

The first thing you will notice is that the data entry actually takes place directly on the monthly model. There are two separate monthly tabs. One is for entering the budgeted figures for all items (the forecast) and the other is for entering actual values as they happen. This gives a great comparison in real time of how the financial performance / equity requirements / spending has come along in comparison to what was planned.

Normally, I don't do a budget as well as an actual summary, but for a real estate developer, this is actually useful to know. Each of the monthly and annual tabs will show the value of the given row for the budget and actual as well as show a % of total budget utilized.

I rolled all the summary totals up based on three phases. The user can use one, two, or all three. Additionally, there are separate tabs to show the budget vs. actual detail in regards to hard costs of each phase as well as a summary total of soft costs across all phases.

The more advanced logic that was built in is a LTV so that the model knows how much cash is required in a given month and based on the LTV % defined, the user will see how much equity is required compared to how much of a loan is utilized. This can change as the result of each month populates. Interest accrual happens and is measured against the total interest reserve entered. As the final loan amount is paid off, any remaining interest reserve is credited back or if more interest was required then it will be reduced from the cash flow.

In order to see the timing of the cash flows and the performance therein, an IRR was calculated on a monthly and annual basis. The annual is built by referencing the monthly rate. This is more accurate than trying to sum everything up into annual periods since the cash flows of a real estate development project can have large variances in any given month as far as cash needed vs. cash return. This is especially true if multiple things are being constructed as early items are being sold off.

The nuances of this kind of scenario require a different style of template building in order to get to meaningful financial performance measuring. Stacking that against a budget is all the more beneficial to the manager.

Screenshots of Template (this template is intentionally left with no values for inputs):
hard costs in real estate development

soft costs in real estate development

monthly budget vs. actual real estate development

budget for real estate development

cash flow summary monthly budget

IRR and return summary real estate developer