When using the indirect method for preparing a cash flow statement, the gain on the sale of an asset is adjusted because the cash flow statement starts with net income, which includes the gain. However, the gain does not affect cash directly; it merely reflects the result of an asset being sold above its book value. Here's how to adjust for it:
Dynamic Loan Amortization Schedule Template
Loan amortization schedules that are adaptable and can be integrated into various financial models are highly valuable because they offer versatility, accuracy, and efficiency. These schedules allow for easy adjustments and seamless integration with different scenarios and financial tools, enhancing financial planning and analysis. This template was built to easily plug into any of the models you see here on the site or whatever models you are working with.
Examples of Concessions in Real Estate Modeling
In real estate modeling, "concessions" refer to incentives or discounts offered by property owners or landlords to tenants or buyers to make a property more attractive. These can take various forms, including:
Check out these real estate models.
1. Rent Abatements: Temporary reductions or waivers of rent, often used to entice tenants to sign a lease.
2. Free Rent Periods: Offering a certain period of free rent at the beginning of a lease term.
3. Tenant Improvements (TIs): The landlord may pay for or contribute to the cost of customizing the leased space to the tenant's specifications.
4. Discounts on Purchase Price: Reductions on the sale price of a property.
5. Cash Incentives: Direct payments to tenants or buyers, sometimes referred to as "cash-back" deals.
6. Reduced Security Deposits: Lowering the amount required for a security deposit.
Generally all concessions will be defined by a single row in real estate models and based on a % of potential rental income. Sometimes, these reductions to income are just lumped into vacancy.
You may also be interested in what economic vacancy is in RE models.
Concessions are used to attract tenants or buyers, especially in competitive markets or when there is a need to quickly lease or sell a property. In financial modeling, these concessions are accounted for in cash flow projections, impacting the overall valuation and financial performance of the property.
Article found in Real Estate.
Financial Statement Example for Non-Profit
Creating a comprehensive set of financial statements for a non-profit organization involves several key line items. Here’s an outline for each of the three primary financial statements: the Statement of Financial Position, the Statement of Activities, and the Statement of Cash Flows.
Is There Opportunity in the Wind Farm Business?
There is significant opportunity in the wind farm business due to the increasing global emphasis on renewable energy sources and the decline in the cost of wind technology. Here are some key factors and locations to consider:
Exit Readiness Model - How Ready Is Your Business to Sell?
I built this template to help any business understand their readiness for an exit. It can also be used to help understand the value of a business you are trying to buy. The framework is not specific to any one industry and hits on key aspects such as financial health, governance, risk, scalability, and more. After going through this exercise, it will become clearer how sellable your business is and if it is more likely to sell on the higher or lower end.
What is Economic Vacancy in Real Estate Modeling
Economic vacancy refers to the financial impact of vacant space within a property as well as loss of income from other factors (concessions, bad debt, non-payers, below-market rent). It measures the income loss due to unoccupied units and other factors or spaces that are not generating rental revenue. This concept is crucial in real estate, particularly for property investors and managers, as it reflects the potential income shortfall resulting from vacancies.
What is "Loss to Lease" in Real Estate Modeling?
"Loss to Lease" in real estate is a term used primarily in the context of property management and investment, particularly in multifamily and commercial real estate. It refers to the difference between the actual rent being paid by tenants and the potential rent that could be obtained at current market rates. It could be positive or negative and yes I've seen situations where the existing rent is more than the market rents. It means there is less opportunity to improve rents.
Importance of Cost Allocation, Specifically Overhead Allocation
Cost allocation, particularly overhead allocation, is a critical task in accounting that involves distributing indirect costs to various departments, products, or cost centers. Overhead costs include expenses that are not directly tied to production, such as rent, utilities, and administrative salaries. Proper allocation of these costs is essential for accurate financial reporting, pricing, and strategic decision-making.
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