The Advanced Real Estate Equity Waterfall Modeling Class from Udemy

Learn to model advanced real estate equity waterfall structures like catch-ups, clawbacks, multiple return hurdles, and more in a step-by-step, easy to understand way.

Real estate equity waterfall modeling is one of the most complex and advanced topics in real estate finance and financial modeling.

And with so many different structures out there, it can get overwhelming really quickly.

But fortunately, it doesn't have to be.

If you're looking to learn how to model complex equity waterfall structures like GP catch-ups, clawbacks, multiple return hurdles, and cash-on-cash return hurdles in an easy-to-understand, step-by-step way, you're in the right place.

My name is Justin Kivel, and I've taught over 15,000 students real estate financial modeling and analysis through my Break Into CRE courses.

And personally, throughout my career I've modeled over $1.5 billion of closed commercial real estate acquisitions, each of which involved raising capital from equity investors, and incorporating a unique waterfall structure to match each specific deal.

In this course, we're going to go step-by-step through building four real estate equity waterfall models from scratch:

The GP Catch-Up Model: In this model, we'll cover how to build out a GP "Catch-Up" waterfall structure in Excel, where cash flows are split pari passu until a certain hurdle rate, then cash flows are split in a different ratio until the GP "catches up" to a certain percentage of the overall profits, and then an additional structure above that. And we'll build it in a way where you can just change a few manual inputs, and everything else will change automatically for you.

The Clawback Model: In this model, we'll build out a "Clawback" waterfall structure in Excel, where the GP or sponsor was paid promoted interest early in the fund life based on achieving high returns, but then is required to return that promoted interest at the end of the fund life if the fund as a whole did not hit the preferred returns it promised investors.

The Multiple Return Hurdle Model: In this model, we'll build out a waterfall structure in which two different hurdles need to be hit in order for the GP to earn promoted interest on the deal. For cases where you have an IRR hurdle and also an equity multiple hurdle, this will be your go-to resource.

The Cash-on-Cash Waterfall Model: In this model, we'll build out a cash-on-cash based waterfall model. If you're doing a deal that you don't plan to sell any time soon, and want to get paid now (rather than after a return of capital), you'll find this model extremely helpful. We'll also include the build-out of a separate, back-end profit sharing structure, so you can customize the split of sale proceeds whenever you decide to sell the property.

We'll also clearly explain what's happening in each structure, behind the complex formulas that you see in Excel, so you know exactly how each structure functions in a real estate deal.

Here's what some our students have had to say about the course:

"Very clear explanations. I like the repetition through the different examples to embed learning. It's also helpful to say which shortcuts you are doing so that this becomes second nature."

"This is amazing training. It covers those hands-on things which are hard to get without being into the CRE business. Very detailed, error-less explanation of complex scenarios."

"Unbelievable course. I spent the weekend working through this and the prerequisite Equity Waterfall Modeling Master Class. This was the practical deep dive I needed to compliment my real world and academic exposure to Real Estate Private Equity."

"Fantastic course, and just like with Justin's other courses: crammed with great content and hands-on application. No fluff. Just into the materials and the mechanics. This course is rather advanced, but it covers a lot of different techniques, methods, and concepts."

At the end of this course, you'll be prepared to build a real estate equity waterfall model for any structure that's thrown your way, whether you're taking an Excel test for a real estate analyst or associate job at a real estate private equity or brokerage firm, or you're syndicating capital to buy your first real estate deal and building out investor materials and models to calculate investor returns and promoted interest.

Ready to get started? Just click the enroll button and let's start working through this step-by-step.

Looking forward to seeing you in class.

What's inside

Learning objectives

Learn to model real estate equity waterfall structures with a gp catch-up clause
Learn to model waterfall structures with an lp clawback clause

Learn to model waterfall structures with multiple preferred return hurdles (irr & equity multiple)
Learn to model waterfall structures based on cash-on-cash preferred return hurdles

Learn to model real estate equity waterfall structures with a gp catch-up clause
Learn to model waterfall structures with an lp clawback clause
Learn to model waterfall structures with multiple preferred return hurdles (irr & equity multiple)
Learn to model waterfall structures based on cash-on-cash preferred return hurdles

Syllabus

Introduction

What We Will Cover

A Sneak Peek Into What You'll Build

How This Course Is Structured

Traffic lights

Read about what's good

what should give you pause

and possible dealbreakers

Covers advanced real estate equity waterfall structures, which are essential for professionals in real estate finance and financial modeling

Explores GP catch-up, clawback, and multiple return hurdle models, which are commonly used in complex real estate deals

Teaches how to model cash-on-cash based waterfall models, which are useful for deals where immediate returns are prioritized over long-term capital appreciation

Requires prior knowledge of equity waterfall modeling, which may necessitate taking a prerequisite course for those new to the topic

Uses Excel for modeling, requiring learners to have access to and familiarity with the software, which may pose a barrier for some

Reviews summary

Advanced real estate equity waterfall modeling

According to learners, this course provides a practical deep dive into complex real estate equity waterfall structures. Students consistently praise the clear and easy-to-understand explanations, even for advanced topics like GP catch-ups, clawbacks, and multiple return hurdles. Many highlight the hands-on application and the step-by-step approach to building models from scratch in Excel. The instructor's experience and ability to break down complex formulas are frequently mentioned as strengths. While the course is advanced, it is seen as packed with great content and directly applicable to real-world scenarios and career goals in real estate finance.

Course is advanced, some prior knowledge helps.

"I spent the weekend working through this and the prerequisite Equity Waterfall Modeling Master Class."

"This course is rather advanced..."

"Definitely not for beginners, but if you have some modeling background, this takes you to the next level."

Thoroughly covers complex waterfall types.

"Learn to model advanced real estate equity waterfall structures like catch-ups, clawbacks, multiple return hurdles, and more"

"covers a lot of different techniques, methods, and concepts."

"The amount of detail on the GP Catch-Up and Clawback models is exceptional."

Skills directly useful for real estate careers.

"This was the practical deep dive I needed to compliment my real world and academic exposure"

"It covers those hands-on things which are hard to get without being into the CRE business."

"prepared to build a real estate equity waterfall model for any structure that's thrown your way, whether you're taking an Excel test for a job... or syndicating capital"

Focus on practical Excel model building.

"This was the practical deep dive I needed"

"crammed with great content and hands-on application. No fluff."

"It covers those hands-on things which are hard to get without being into the CRE business."

"I've taken other modeling courses, but this one stands out because it actually walks you through building the models yourself step-by-step."

Instructors explain complex topics simply.

"Very clear explanations."

"Very detailed, error-less explanation of complex scenarios."

"Clearly explain what's happening in each structure, behind the complex formulas"

"Explains the complex formulas in a way that is easy to digest and understand."

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 Advanced Real Estate Equity Waterfall Modeling Class with these activities:

Review Real Estate Finance Fundamentals

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Solidify your understanding of core real estate finance concepts. This will provide a strong foundation for grasping the complexities of equity waterfall modeling.

Browse courses on Real Estate Finance

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Review key real estate finance terms and concepts.
Practice basic property valuation techniques.
Familiarize yourself with different investment metrics.

Read 'Real Estate Finance & Investments' by William Brueggeman and Jeffrey Fisher

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Gain a deeper understanding of real estate finance principles. This book provides a comprehensive overview of the subject and will enhance your comprehension of the course material.

View Real Estate Finance & Investments ISE on Amazon

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Read the chapters related to equity investments and returns.
Take notes on key concepts and formulas.
Work through the examples provided in the book.

Model a Simple Equity Waterfall

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Practice building a basic equity waterfall model in Excel. This hands-on exercise will reinforce your understanding of the fundamental concepts covered in the course.

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Define the key inputs for the waterfall model.
Set up the cash flow structure in Excel.
Implement the waterfall logic using formulas.
Test the model with different scenarios.

Four other activities

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Create a Presentation on Equity Waterfall Structures

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Solidify your knowledge by creating a presentation explaining different equity waterfall structures. This will help you internalize the concepts and improve your communication skills.

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Research different types of equity waterfall structures.
Organize the information into a clear and concise presentation.
Prepare visuals to illustrate the concepts.
Practice delivering the presentation.

Read 'Mastering Financial Modeling in Excel' by Michael Rees

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Enhance your Excel modeling skills to build more sophisticated waterfall models. This book provides valuable tips and techniques for improving your modeling efficiency and accuracy.

View Principles of Financial Modelling: Model Design... on Amazon

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Review the sections on advanced Excel formulas and functions.
Practice building financial models using the techniques described in the book.
Apply these techniques to your equity waterfall models.

Build a Dynamic Waterfall Model Template

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Create a reusable Excel template for modeling different equity waterfall structures. This will allow you to quickly analyze and compare various investment scenarios.

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Design a flexible template that can accommodate different waterfall structures.
Implement the necessary formulas and logic to calculate investor returns.
Incorporate data validation and error handling to ensure accuracy.
Document the template and provide clear instructions for its use.

Tutor Other Students

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Reinforce your understanding by helping other students learn about equity waterfall modeling. Teaching others is a great way to solidify your own knowledge.

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Offer to tutor other students who are struggling with the material.
Prepare explanations and examples to help them understand the concepts.
Answer their questions and provide feedback on their work.

Career center

Learners who complete The Advanced Real Estate Equity Waterfall Modeling Class will develop knowledge and skills that may be useful to these careers:

Real Estate Private Equity Analyst

A Real Estate Private Equity Analyst needs to be proficient in advanced financial modeling, particularly in designing and understanding complex investment structures, and this course is highly useful. This course teaches how to build real estate equity waterfall models with multiple hurdles, clawbacks, and catch-up provisions, which are common in private equity deals. The course's detailed coverage of various waterfall structures directly builds skills needed for this position. The focus on practical, hands-on modeling ensures an analyst can evaluate the financial implications of deal structures, making this course particularly relevant for a Real Estate Private Equity Analyst and this career.

See salaries and explore the career path for Real Estate Private Equity Analyst

Real Estate Financial Analyst

A Real Estate Financial Analyst frequently uses financial models to analyze potential real estate investments, and this course is directly relevant to the role. This course teaches the construction of sophisticated equity waterfall models, which are essential for determining investor returns. The course's focus on complex structures like GP catch-ups and clawbacks directly builds skills for real world scenarios. The hands-on modeling of different waterfall structures, including cash-on-cash hurdles and multiple return hurdles, provides practical experience for a financial analyst. Such experience demonstrates to potential employers that the learner has a deep understanding of the calculations that go into complex real estate deals.

See salaries and explore the career path for Real Estate Financial Analyst

Real Estate Acquisitions Analyst

A Real Estate Acquisitions Analyst needs to have a deep understanding of financial models to evaluate potential acquisitions, which is a key focus of this course. This course's specific focus on equity waterfall structures, including complex scenarios like GP catch-ups and clawbacks, directly applies to the work of an acquisitions analyst. The course's hands-on approach to building these models from scratch helps to ensure that an analyst is prepared to perform well in the acquisitions process. The ability to model cash-on-cash returns and multiple return hurdles, as taught in this class, is crucial for a Real Estate Acquisitions Analyst who must understand a deal's financial implications.

See salaries and explore the career path for Real Estate Acquisitions Analyst

Real Estate Associate

A Real Estate Associate is often involved in evaluating investment opportunities, requiring advanced financial modeling skills, and this course is ideal for those seeking such a career. This course directly teaches the core skills needed to model complex real estate equity waterfalls, including catch-ups, clawbacks, and multiple return hurdles, providing a solid background for this kind of work. The step-by-step approach of the course, along with its detailed explanation of each structure, is designed to ensure that a future associate understands the financial mechanics behind each deal. Such understanding is essential for an associate who needs to explain these structures to senior team members and clients alike and to evaluate the structure of deals independently.

See salaries and explore the career path for Real Estate Associate

Real Estate Investment Manager

A Real Estate Investment Manager is responsible for making strategic investment decisions, and this course can help inform this decision making by giving a crucial skill set. This course provides a detailed approach to understanding different equity waterfall models, including the mechanics of GP catch-ups and clawbacks, which are often used in structuring real estate transactions. A manager will be better equipped to understand the implications of each potential deal structure. The course's focus on cash-on-cash and multiple return hurdle models allows the Investment Manager to evaluate deals and understand the financial implications for each participant.

See salaries and explore the career path for Real Estate Investment Manager

Real Estate Portfolio Manager

A Real Estate Portfolio Manager needs to oversee the performance of various real estate investments, and this course provides valuable training for that role. This course will help a portfolio manager understand the nuances of complex equity waterfall structures, including GP catch-ups, clawbacks, and multiple hurdle rates, all of which are critical in managing a real estate portfolio. The course's detailed approach to modeling these structures enhances the clarity of understanding, which is necessary for effective portfolio management. While not day-to-day, an understanding of how returns are calculated is important to a portfolio manager who needs to evaluate the performance of their investments.

See salaries and explore the career path for Real Estate Portfolio Manager

Real Estate Fund Manager

A Real Estate Fund Manager must understand the complex financial aspects of fund structures, and this course helps with that. The course focuses on advanced equity waterfall modeling, which is often used in structuring real estate funds. The course covers various models that are applicable to fund management, including GP catch-ups, clawbacks, and multiple return hurdles. This course will be useful for a fund manager who needs to understand how investor returns will be calculated, how preferred returns are met, and how promoted interest is allocated, so that they may in turn manage a successful fund.

See salaries and explore the career path for Real Estate Fund Manager

Real Estate Consultant

A Real Estate Consultant often assists clients with financial analysis and investment strategies, and this course builds a valuable skillset for consulting. The course teaches how to build complex equity waterfall models, which are crucial for consultants who need to evaluate investment structures. The focus on GP catch-ups, clawbacks, and multiple hurdle rates is directly relevant to consulting work. A consultant will be better prepared to advise clients, with hands-on capabilities in cash flow modeling, and will be able to analyze the financial implications of various real estate deals.

See salaries and explore the career path for Real Estate Consultant

Real Estate Development Analyst

A Real Estate Development Analyst needs a strong understanding of financial modeling, especially of how capital is structured, making this course relevant for that career path. This course covers the modeling of complex equity waterfall structures, including cash-on-cash returns, multiple return hurdles, GP catch-ups, and clawbacks. These are common terms in the deal structuring of development projects. The detailed approach of this course, which explains how each structure functions in real estate, will be useful for development analysts who need to grasp the financial mechanics of the projects they analyze.

See salaries and explore the career path for Real Estate Development Analyst

Real Estate Underwriter

A Real Estate Underwriter evaluates the financial risk and viability of real estate deals, and the skills taught in this course can contribute to this job function. This course gives an understanding of complex equity waterfall structures, including GP catch-ups and clawbacks, which are important in the assessment of deal structures for underwriting purposes. The course material helps an underwriter understand nuances of how investor returns are calculated that would be hard to find anywhere else. Because of this specialized focus, the course will be helpful to one who needs to have a strong grasp of deal structuring.

See salaries and explore the career path for Real Estate Underwriter

Real Estate Investment Banking Analyst

A Real Estate Investment Banking Analyst is expected to have strong financial modeling skills, and this course could prove to be useful in that career. This course on complex equity waterfall modeling teaches the skills needed to structure and analyze real estate transactions. The focus on GP catch-ups, clawbacks, and multiple hurdle rates provide a useful understanding of deal structures. Modeling these will be useful for an analyst who is involved in creating and evaluating financial models related to real estate transactions, including valuations, mergers, and acquisitions.

See salaries and explore the career path for Real Estate Investment Banking Analyst

Real Estate Development Manager

A Real Estate Development Manager is responsible for overseeing the financial aspects of development projects, and this course provides useful knowledge in this area. This course provides a deep dive into how equity waterfall structures work, allowing a Development Manager to understand how project returns are allocated to investors and partners. This is useful for a manager who needs to understand how deal structures impact the overall financial performance of a project. The ability to model cash-on-cash and multiple return hurdles, as taught in this course, is specifically relevant to this function and a helpful tool for a Development Manager.

See salaries and explore the career path for Real Estate Development Manager

Real Estate Asset Manager

A Real Estate Asset Manager is responsible for maximizing the value of real estate holdings, and this course may be relevant as it provides a crucial component of that process. This course covers advanced modeling of equity waterfall structures, including GP catch-ups and clawbacks, which are useful for understanding the financial performance of a real estate asset. Though not all asset managers build models on a routine basis, the knowledge of how these structures function is useful for one who needs to evaluate the investment returns of assets under management. Asset managers who need a deeper understanding of how returns are calculated will find this course helpful.

See salaries and explore the career path for Real Estate Asset Manager

Commercial Lending Analyst

A Commercial Lending Analyst evaluates the financial feasibility of commercial real estate loans, and this course may be useful in building certain related skills. This course dives into the modeling of complex equity waterfall structures, including how returns are split between investors and how catch-up and clawback provisions function. This knowledge can help a lending analyst to better understand the financial health of a deal they would be underwriting or servicing. This course may be useful for an analyst who wants to understand the inner financial workings of real estate transactions.

See salaries and explore the career path for Commercial Lending Analyst

Commercial Real Estate Broker

A Commercial Real Estate Broker could benefit from this course because understanding financial modeling helps a broker better serve their clients. This course on advanced real estate equity waterfall modeling teaches how to model complex structures like GP catch-ups and clawbacks, allowing a broker to better understand investor returns and how deals are structured. Understanding these complexities is beneficial for a broker who needs to clearly explain deal terms and structures to clients, particularly those related to private equity and complex deal structures. Such knowledge provides an edge in a competitive industry.

See salaries and explore the career path for Commercial Real Estate Broker

Reading list

We've selected two 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 Advanced Real Estate Equity Waterfall Modeling Class.

Real Estate Finance & Investments ISE

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Comprehensive resource on real estate finance and investments. It covers a wide range of topics, including property valuation, mortgage markets, and investment analysis. It is commonly used as a textbook in real estate programs and provides a solid foundation for understanding advanced topics like equity waterfall modeling. Reading this book will provide additional depth to the course.

Real Estate Finance & Investments ISE

Paperback

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Real Estate Finance & Investments ISE

Kindle Edition

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Principles of Financial Modelling

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Great resource for improving your financial modeling skills in Excel. It covers a wide range of topics, including best practices, advanced formulas, and scenario analysis. While not specific to real estate, it will help you build more robust and efficient equity waterfall models. This book is more valuable as additional reading than as a current reference.

Principles of Financial Modelling: Model Design and...

Kindle Edition

$$$

The Advanced Real Estate Equity Waterfall Modeling Class

What's inside

Learning objectives

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Reviews summary

Advanced real estate equity waterfall modeling

Activities

Career center

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