From the course: Real Estate Deal Structuring: Introduction to the Waterfall Framework

Unlock this course with a free trial

Join today to access over 22,600 courses taught by industry experts.

Modeling out the preferred return

Modeling out the preferred return

From the course: Real Estate Deal Structuring: Introduction to the Waterfall Framework

Start my 1-month free trial Buy for my team

Modeling out the preferred return

“

- [Instructor] Hey, welcome back. Right, this is the first lecture where we're going to dive into the Excel implementation of the waterfall framework. So in this lecture we're going to go through this item right here, the preferred return. So remember this, eight percent preferred return, and we're going to look at just Alice, since all of the calculations for the preferred returns for everyone else is calculated exactly the same way. So just remember how much she's investing, okay. This is her equity investment. She's putting in $36,625 into this investment. And there's a preferred return of eight percent. Now, remember even though she is the project manager, her money, the equity that she's putting in, is getting treated the same way as the money that's being put in by the other investors. So when we're talking about this 36,000, we're talking about her, Alice, as an investor. When we're talking about the incentive splits, that's when we're talking about Alice as a project manager…

Contents