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Understanding Discounted Cash Flow Modeling for Commercial Real Estate

May 05, 2015 by in Resources

Of the many ways we value commercial real estate, it’s hard to argue against the tenets of a discounted cash flow valuation.

But there are potential weaknesses, so in this commercial real estate resource blog, we break down the exact benefits and shortcomings of the DCF, in short, everything you need to know when presenting, receiving, or underwriting your own discounted cash flow model.

The bottom line is that everyone thinks differently. When we were in business school, we learned about diversity. But now that we’re all grown up, we know there are plenty of similarities in our thinking, most notably, the bottom line. In the niche of commercial property valuation, understanding the standard valuation method is critical to understanding the bottom line, and when we’re dealing with seven, eight, or nine digit property price tags, very slight changes in calculation can have dramatic bottom line effects.

When to be wary of the DCF:

The saying has always been the same, garbage in, garbage out, and that’s what we need to look out for. One of the many differences between discounted cash flow modeling, and say, a simple GRM calculation, is a ton of assumptions. And although assumptions aren’t bad at heart, they have the potential to be. The DCF allows us to capture a slew of variables at the mercy of our own expertise, which means our best option at finding and understanding the true value of any commercial property is educating ourselves.

The traditional method of valuation:

We’ve mentioned the shortcomings of the DCF, so let’s find out exactly when and why this analysis method rises to the occasion. Continue reading >>

Annual Spring #CRE Coupon

Apr 17, 2015 by in General

It’s that time of year again. We’ve just finished paying our taxes and we can’t stop sneezing from the blooming, pollen spewing flowers. But that’s ok, considering it’s a year before we have to worry about tax preparation again. Instead it’s time to stock up on the good stuff for the rest of this year. In […]

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A Spring Cleaning

Mar 24, 2015 by in General

Spring marks the third iteration of REsheets! If you’ve spent much time with REsheets lately, you’ve noticed a fresh look to accompany our updated commercial real estate analysis products. Thanks for stopping by, and let us know what you think. While you’re here, feel free to check out our analysis services, or our updated commercial […]

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Happy Holidays

Dec 18, 2014 by in General

Happy Holidays from your friends at REsheets!

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Come Celebrate Cyber Week with REsheets!

Dec 03, 2014 by in General

Join us this week for a 20% discount on any REsheets product! Be it our Famous REsheets Toolbelt, or one of our expert Discounted Cash Flow Models, each is 20% off. Please use Coupon Code: RECYBER Because on the technology side of Commercial Real Estate analysis, Cyber Week is exactly our style.

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The REsheets Vault: 2010 NFL Real Estate

Nov 20, 2014 by in General

Let’s revisit a 4 year old NFL analysis with some current value. We thought we’d take another look at one of our original and favorite posts: Valuing the Commercial Real Estate Industry | Whats It Take to Own an NFL Team? The title won’t fool you, it’s a doozy. In 2010, we analyzed the owners of […]

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