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Justin Kivel

Everything you need to know about real estate equity waterfalls, all in one place. 

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Everything you need to know about real estate equity waterfalls, all in one place. 

This course will teach you everything need to know about how an equity waterfall works in real estate transactions, from the underlying mechanisms behind a waterfall, to how an equity waterfall is structured, to how to build an equity waterfall financial model in Excel. Whether you're syndicating a real estate deal on your own, investing as a Limited Partner in a real estate syndication, or you're a current real estate professional looking to add a lucrative skill set to your arsenal, this is a one-stop shop for everything real estate equity waterfall-related.

This course was designed for people from all parts of the real estate spectrum, including:

  • Current or aspiring real estate syndicators who want to earn outsize returns on their investments - Being aligned with investor interests is critical when structuring a real estate transaction, and a clear waterfall structure with incentives based on investment performance is the most direct way to create a win-win relationship for your team and your capital partners. Understanding the mechanisms behind an equity waterfall and having a dynamic waterfall model in your toolkit will allow you to structure your deals in the most advantageous way for both yourself and your investors.

  • Passive real estate investors involved as LPs in real estate syndications who want to invest passively with confidence - The Limited Partner position in real estate investing is a great role - no work involved, an inflation-protected, tax-shielded investment, and experienced management - but do you know how much you're paying in fees? Understanding how a waterfall structure functions and having a dynamic Excel model to calculate true net returns can be the difference between a sound investment and being locked into a watered-down deal for years to come.

  • Current real estate professionals who want to earn more money - Equity waterfall modeling is one of the most desired skill-sets in all of real estate finance, with professionals proficient in this topic earning more than 8.1% above their peers according to national real estate recruiting firm RETS Associates. If you are a current or aspiring real estate professional, understanding the mechanics of an equity waterfall functions and how to build an equity waterfall in Microsoft Excel will put you head and shoulders ahead of your peers and add a rare and lucrative skill-set to your real estate investing arsenal.

Here's what some of our students have had to say:

"I've tried other real estate financial modeling classes, and they tended to be too general (even where they had some hands-on Excel exercises). Justin hit just the right balance between the big picture and the nuts and bolts of building the worksheet, and, therefore, truly understanding it."

"Clear and straightforward. Wow. Amazed at this curriculum. He has made something super difficult easy and he explains it super clear. Its like meeting a super cool private equity guy spend the time to show you step by step. He can make your career. "

"This course is highly recommended for individuals wanting to learn about equity waterfall modeling. It's obvious that the instructor understands this topic very well and he presents it in a very simplified manner. The process of creating the model from scratch and having the instructor walk you through it on a step-by-step basis really solidified my understanding of this material. Excellent course. "

"Highly detailed and informative. Great for analyst who are just getting started. It's like taking an MBA level course. "

"This is a phenomenal course as are Justin's other courses. I am a commercial real estate professional working as an analyst at a 'Big Four' broker and have found all these courses to be invaluable, particularly if you are concerned about the technical test for job interviews."

Understanding equity waterfalls will put you miles ahead of the game, whether you're looking to do your first deal or trying to land a job in commercial real estate finance. Looking forward to seeing you in the course.

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What's inside

Learning objectives

  • A complete "done-for-you" institutional-level equity waterfall model to use in any real estate transaction.
  • A thorough understanding of the key components of an equity waterfall and how it is used in real estate investing.
  • The ability to build a fully functioning, dynamic equity waterfall model in microsoft excel to use for any deal in any situation.

Syllabus

Students will be introduced to the real estate equity waterfall model we will build in this course in this section.
Welcome!
What We Will Cover
Read more
A Sneak Peek Into What You'll Build
Who This Course Is For
About The Instructor & Student Success Stories
Disclaimer
Students will learn the fundamentals of a real estate partnership and how partnership agreements affect real estate equity waterfall structures.
Real Estate Partnership Basics
The General Partner
The Limited Partner
GP Compensation
The Waterfall Structure
Students will learn how a real estate equity waterfall model works in practice in this section.
The "Why" Behind an Equity Waterfall
How Equity Waterfall Structures Work
Equity Waterfall Example
Promoted Interest vs. Cash Flow Split
Measuring Partnership Investment Returns
Students will build out the real estate equity waterfall model step-by-step in Microsoft Excel in this section of the course.
Equity Waterfall Modeling Walk-Through
Modeling GP & LP Cash Flow Splits
Building Out The Investment Timeline
Modeling Project-Level Cash Flows
Building Out The NOI
Modeling Principal & Interest Payments
Purchase & Loan Metrics
Disposition Metrics
Modeling Loan Payoff & Project-Level Cash Flows
Modeling The Preferred Return
Beginning Balance & Preferred Interest Accrual
Modeling The Preferred Return Over Time
Modeling LP Contributions & Distributions
Modeling GP Contributions & Distributions
Total Distributions & Cash Flow Remaining
Modeling Hurdle #2
Beginning Balance & Hurdle #2 Accrual
Modeling Hurdle #2 LP Distributions & Total Cash Flow
Modeling Hurdle #2 GP Distributions
Modeling Hurdle #3
Hurdle #3 GP Distributions
Modeling Hurdle #4
Total LP Cash Flows & Returns
Total GP Cash Flows & Returns
Project-Level Return Metrics
Calculating Promoted Interest
Students will learn answers to frequently asked questions about real estate equity waterfall models in this section of the course.
IRR Does Not Equal Cash-on-Cash
How To Add What You've Built To Another Model
How To Incorporate Multiple Partners
Students will learn how to use the real estate equity waterfall modeling skill set they've built in this course going forward.
Where To Go From Here
Bonus Lecture
Bonus Lecture - The Next Step

Good to know

Know what's good
, what to watch for
, and possible dealbreakers
Teaches the fundamentals of real estate partnerships and how they affect equity waterfall structures
Develops the sought-after and lucrative skill set of equity waterfall modeling in Microsoft Excel
Builds a complete 'done-for-you' institutional-level equity waterfall model for use in any real estate transaction
Provides a thorough understanding of the key components of an equity waterfall and how it is used in real estate investing
Offers a step-by-step equity waterfall modeling walk-through in Microsoft Excel
Answers frequently asked questions about real estate equity waterfall models

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Reviews summary

Well-received real estate equity modeling course

Learners say that this course is exceptionally well taught and well structured. The teacher is praised for being clear, enthusiastic, and having a good pace. They also answer questions clearly and comprehensively. Most of all, students appreciate the working waterfall model that they can use going forward.
Clear and enthusiastic instructor with good pacing.
"The teacher was clear, enthusiastic, and well paced."
"His answers in the Q&A section are clear and comprehensive."
Provides a valuable working waterfall model.
"Most of all, having a working waterfall model at the end of the course is an amazing resource going forward."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in The Real Estate Equity Waterfall Modeling Master Class with these activities:
Review Real Estate Finance
Refresh your knowledge of real estate finance concepts to strengthen your understanding of equity waterfalls.
Browse courses on Real Estate Finance
Show steps
  • Review fundamental concepts such as debt, equity, and return on investment.
  • Revisit essential financial calculations, including net present value and internal rate of return.
Connect with Professionals in Real Estate Finance
Seek guidance and expertise from professionals in the field to enhance your understanding of equity waterfalls and real estate investment.
Browse courses on Real Estate Finance
Show steps
  • Identify potential mentors through networking events, industry conferences, or online platforms.
  • Reach out to mentors and request their guidance on equity waterfall modeling and real estate investment.
Follow Online Tutorials on Equity Waterfalls
Expand your knowledge by following online tutorials that provide step-by-step guidance on equity waterfall modeling.
Browse courses on Real Estate Finance
Show steps
  • Identify reliable online resources that offer comprehensive tutorials.
  • Follow the instructions and complete the exercises provided in the tutorials.
Five other activities
Expand to see all activities and additional details
Show all eight activities
Join a Study Group on Equity Waterfalls
Enhance your learning by connecting with peers, discussing concepts, and solving problems collaboratively.
Browse courses on Real Estate Finance
Show steps
  • Identify or form a study group with individuals interested in equity waterfalls.
  • Meet regularly to discuss course materials, case studies, and modeling exercises.
Assist Nonprofits in Financial Modeling
Apply your skills for a good cause by volunteering to assist nonprofit organizations with their financial modeling needs, involving equity waterfall structures.
Browse courses on Real Estate Finance
Show steps
  • Identify nonprofit organizations that could benefit from financial modeling support.
  • Offer your services and collaborate with the organization to understand their financial needs.
  • Use your equity waterfall modeling skills to assist in developing and analyzing financial models.
Develop a Real Estate Equity Waterfall Model
Solidify your understanding by building a real-world equity waterfall model using the techniques learned in the course.
Browse courses on Real Estate Finance
Show steps
  • Define the project parameters, including the property details, investment structure, and assumptions.
  • Create a financial model that incorporates the equity waterfall structure and calculates key metrics.
  • Analyze the model and identify potential risks and opportunities.
  • Present your findings and recommendations to stakeholders.
Write a White Paper on Equity Waterfalls
Deepen your understanding by writing a white paper that analyzes the intricacies of equity waterfalls and their implications in real estate investment.
Browse courses on Real Estate Investment
Show steps
  • Research and gather insights on equity waterfall structures.
  • Analyze market trends and case studies to support your analysis.
  • Develop a written report that presents your findings and insights.
Participate in Real Estate Modeling Competitions
Challenge yourself by participating in real estate modeling competitions to test your skills and gain valuable experience.
Browse courses on Real Estate Finance
Show steps
  • Identify suitable competitions that focus on equity waterfall modeling.
  • Form a team or work individually to develop a comprehensive equity waterfall model.
  • Submit your model and present it to a panel of judges.

Career center

Learners who complete The Real Estate Equity Waterfall Modeling Master Class will develop knowledge and skills that may be useful to these careers:
Real Estate Portfolio Manager
Real Estate Portfolio Managers oversee real estate investments and make decisions about buying, selling, and financing properties. A strong understanding of equity waterfalls is essential for those in this role, as they need to be able to evaluate the performance of real estate investments and make decisions about how to maximize returns.
Real Estate Fund Manager
Real Estate Fund Managers raise capital from investors and invest it in real estate assets. They typically use equity waterfalls to structure their funds, so a deep understanding of how they work is essential. This course will provide a strong foundation for those in this career.
Real Estate Private Equity Associate
Real Estate Private Equity Associates focus on sourcing, evaluating, and executing real estate investments. This course can be very useful to those in this career as it will help them to understand the complexities of real estate equity waterfalls and how they impact investment returns.
Investment Manager
Investment Managers oversee investments and make decisions about how to allocate capital. This course can be very useful for those in this career as it will help them to understand and evaluate investments structured using real estate equity waterfalls.
Real Estate Attorney
Real Estate Attorneys advise clients on real estate transactions. This course may help those in this career by providing a deep understanding of how real estate equity waterfalls work and how they can be used to structure real estate deals.
Real Estate Appraiser
Real Estate Appraisers value real estate properties. This course may be helpful for those in this career as it provides a deep understanding of how real estate equity waterfalls work and how they can be used to value real estate assets.
Real Estate Broker
Real Estate Brokers facilitate the buying and selling of real estate properties. This course may be helpful for those in this career as it provides a deep understanding of how real estate equity waterfalls work and how they can be used to structure real estate transactions.
Commercial Real Estate Lender
Commercial Real Estate Lenders provide financing for commercial real estate projects. This course may be helpful for those in this career as it provides a deep understanding of how real estate equity waterfalls work and how they can be used to structure real estate loans.
Financial Analyst
Financial Analysts provide financial advice to companies and individuals. This course can be very useful to those in this career as it will help them to understand the complexities of real estate equity waterfalls and how they impact investment returns.
Real Estate Investment Banker
Real Estate Investment Bankers provide financial advice to real estate companies, including mergers and acquisitions, capital raising, and debt restructuring. Those in this career may find this course useful as it provides them with a deep understanding of how real estate equity waterfalls work.
Real Estate Accountant
Real Estate Accountants manage the financial affairs of real estate companies. This course may assist those in this career by offering a deep understanding of how real estate equity waterfalls work and how they can be used to account for real estate investments.
Private Equity Analyst
Private Equity Analysts focus on sourcing, evaluating, and executing private equity investments. This course may be helpful for those in this career as it offers a thorough understanding of equity waterfalls, which are commonly used to structure private equity funds.
Venture Capital Analyst
Venture Capital Analysts focus on sourcing, evaluating, and executing venture capital investments. This course may be helpful for those in this career as it offers a thorough understanding of equity waterfalls, which are commonly used to structure venture capital funds.
Real Estate Investment Analyst
Real Estate Investment Analysts help fund managers make decisions about real estate acquisitions and dispositions, and monitor asset performance. This course may be helpful for those in this career as it offers a thorough understanding of equity waterfalls, which are commonly used to structure real estate funds.
Real Estate Developer
Real Estate Developers acquire, develop, and manage real estate properties. This course maybe helpful as a supplement to the core skills needed in this role, as it provides a deep understanding of how real estate equity waterfalls work and how they can be used to structure real estate transactions.

Reading list

We've selected nine books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in The Real Estate Equity Waterfall Modeling Master Class.
While a textbook, Real Estate Finance and Investments is used commonly as a reference book by both real estate professionals and academics. It is particularly thorough in its description of real estate capital markets.
Provides a comprehensive overview of the private equity industry. It covers a wide range of topics, including private equity funds, investment strategies, and exit strategies. This book valuable resource for anyone who wants to learn more about private equity.
Classic guide to investing. It provides a framework for making sound investment decisions and avoiding common pitfalls. This book valuable resource for anyone who wants to learn more about investing.
Classic guide to security analysis. It provides a framework for analyzing companies and valuing their securities. This book valuable resource for anyone who wants to learn more about security analysis.
Provides a comprehensive overview of real estate asset management. It covers a wide range of topics, including property management, leasing, and financial analysis. This book valuable resource for anyone who wants to learn more about real estate asset management.
Provides a comprehensive overview of options, futures, and derivatives. It covers a wide range of topics, including option pricing, futures contracts, and derivative strategies. This book valuable resource for anyone who wants to learn more about options, futures, and derivatives.
Provides a comprehensive overview of real estate market analysis. It covers a wide range of topics, including market research, forecasting, and risk assessment. This book valuable resource for anyone who wants to learn more about real estate market analysis.

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