Introducing Back of The Envelope Development Analysis

Learn back of the envelope development analysis step by step with done-for-you templates and easy-to-follow videos


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If a real estate development project doesn’t make sense on the "back of an envelope", then rarely will it make sense with a more rigorous analysis. Using simple back of the envelope calculations for initial screening means you can quickly filter out deals that aren't feasible and instead focus your time and attention on the most promising projects.

In this course you will learn the process of back of the envelope development analysis step by step with an example case study and a fully unlocked Excel spreadsheet.

What Would Learning Back of The Envelopment Development Analysis do For You?

  • Save time and attention when screening potential development opportunities
  • Understand a practical and commonly used approach to development financial feasibility
  • Better understand potential investment opportunities as a limited partner or other CRE professional

What is Back of The Envelope Development Analysis?

Back of The Envelope Development Analysis is an online interactive video-based course that teaches you back of the envelope development analysis step by step. The course includes a fully unlocked Excel model and a practical commercial real estate case study. It’s for beginners who are new to development analysis and industry professionals who want to sharpen their skills.

The training is released in 7 core modules and consists of easy-to-follow videos and done-for-you templates. All of the training is online, contained in the private member only site.

During the course we’ll walk through key development performance metrics, the construction budget, construction loans, the development proforma, and a complete step by step development analysis case study.

Plus, you’re a student for life. That means you don’t have to worry about forgetting the material because you can retake the course at any time.

Who Should Take This Course?

  • New analysts and CRE professionals who need to learn the basics of development analysis for the first time.
  • Existing commercial real estate professionals who want to brush up on their development analysis skills.
  • Career changers who want to break into the industry but don’t have any prior development analysis experience.
  • Students who want to learn back of the envelope development analysis with a practical case study and a fully unlocked Excel model.
  • Limited partners and other CRE Professionals who want to better understand the financial feasibility and potential of investment opportunities.

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What's Included:



Module 1: Overview
  • High level overview of back of the envelope development analysis.
  • How to calculate the going-in cap rate and going-out cap rate.
  • Discussion and example of the development spread.
  • Simple back of the envelope development analysis.
  • Example calculation for the development spread, profit margin, and dollar amount of expected profit.
  • Interpretation of these simple calculations and discussion of the remainder of the course.
Module 2: Key Terms and Performance Metrics
  • Review of the capitalization rate concept.
  • Review of key terms including the going-in cap rate, going-out cap rate, yield on cost, terminal cap rate, development yield, exit cap rate, built to rate, and sell to rate.
  • Overview of the sources and uses of funds.
  • Overview of the capital stack including senior debt, mezzanine debt, preferred equity, and common stock.
  • Review of the real estate proforma.
  • Overview of the phases of a real estate development project.
  • Discussion and example calculations for net operating income, operating margin, development yield, net profit, equity multiple, development spread, and the cash on cash return.
Module 3: Case Study Setup
  • Case study setup for a potential 100 unit multifamily development.
  • Includes background information for the market, construction, and loan terms.
  • Defines key performance metrics and requirements for go/no-go decision.
Module 4: Development Budget
  • Overview of the construction and development budget
  • Description of the components of the development budget including land costs, hard costs, soft cost, financing costs, and contingency.
  • How to calculate the interest reserve and how it impacts the construction budget.
  • Review of how the budget fits into the development timeline
  • Step by step walk through of the development budget assumptions for the case study using the back of the envelope Excel model.
Module 5: Financing
  • Overview of the components of the capital stack and repayment priorities
  • How a construction loan works including common loan terms, approval documents, and underwriting process
  • Review of how to calculate the interest reserve for a construction loan and discussion of what happens if an interest reserve runs out.
  • Step by step walkthrough of the financing assumptions for the case study using the back of the envelope Excel model.
Module 6: Proforma
  • Overview of the real estate proforma and why it’s important for back of the envelope analysis
  • Identification of the three major components of a real estate proforma
  • Review of common proforma format and assumptions
  • Step by step walkthrough of the proforma assumptions for the case study using the back of the envelope Excel model.
Module 7: Performance Metrics
  • Identification and discussion of relevant performance metrics for back of the envelope development analysis.
  • Review the calculation methodology for each performance metric.
  • Description of the general guidelines for what “good” looks like for each metric
  • Step by step walkthrough and interpretation of the performance metrics calculations for the case study.
Module 8: Intangibles
  • Overview of what intangibles are and why they matter
  • Identification of the primary intangibles to evaluate
  • Discussion of why development experience is important when evaluating intangibles
  • Review of potential outcomes of a back of the envelopment development analysis and what’s next.
Bonus: Fully Unlocked Excel Model
  • Fully unlocked back of the envelopment development analysis Excel model
  • Includes sections for the construction budget, financing, proforma, and key performance metrics
  • Easy to use in your day to day work or modify as needed to fit your particular workflow
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