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30 Days of 3.0 – Day 14: Returns & DCF Analysis

Welcome to Day 14 in our “30 Days of 3.0” series. Yesterday we talked about how to use our new Ledgers features together to model per-unit operational costs during a phased construction. It’s the end of our second week, and we’re going to take the next week or so to go into more detail about today’s topic: understanding how the property’s operation affects your exit.

The single most important purpose of a commercial real estate cash flow forecast is to help answer the question “Why should I invest?” Doesn’t matter who is doing the work, someone needs that question answered. Building a correct cash flow statement is only part of the story.

One of the other major parts is the exit strategy. What year should you divest, and what will your bank account look like when you do? This is a very important part of building your investment strategy.

Our most recent additions to 3.0 are all around understanding the investment returns. We have a whole host of new values and indicators, including Discounted Cash Flow indicators like Net Present Value and Internal Rate of Return, which we will cover over the next 8 days.

We’ll start kick off the returns portion tomorrow, when we talk about the price and how we calculate it. I’ll see you then, and as always, I hope you have a fantastic day! :)