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Discounted Cash Flow Analysis

  1. Course Number

    BuildAcademy_RE105
  2. Classes Start

    Self-Paced

Syllabus

5.1. The Setup Review

Video 5.1.

Quiz 5.1

5.2. Discounted Cash Flow Analysis Through NOI

Video 5.2.

Quiz 5.2

5.3. Discounted Cash Flow Analysis: Debt Service & Ground Lease Payments

Video 5.3.

Quiz 5.3

5.4. Tax Payment & Off-Sheet Calculations

Video 5.4.

Quiz 5.4

5.5. Net Proceeds from Sale: Net Book Value

Video 5.5.

Quiz 5.5

5.6. Net Proceeds from Sale: Capital Gain on Sale

Video 5.6.

Quiz 5.6

5.7. Net Proceeds from Sale: Tax Payment

Video 5.7

Quiz 5.7

5.8. Net Proceeds from Sale: Putting it All Together

Video 5.8

Quiz 5.8

5.9. Multi-Period Return Measures: Incorporating Net Proceeds from Sale

Video 5.9

Quiz 5.9

5.10. Multi-Period Return Measures: Net Present Value

Video 5.10

Quiz 5.10

5.11. Net Present Value Internal Rate of Return

Video 5.11

Quiz 5.11

5.12. Multi-Period Return Measures Equity Multiple

Video 5.12

Quiz 5.12

5.13. Multi-Period Return Measures: Comparing IRR NPV Equity Multiple

Video 5.13

Quiz 5.13

5.14. Professional Practice Advice

Video 5.14

Quiz 5.14

5.15. Conclusion

Video 5.15

5.16. Final Course Assignment

Subsection

5.17. Discussion

Discounted Cash Flow Analysis

About This Course

In this course you will learn the steps for performing Discounted Cash Flow Analysis. Of all the courses, this one is perhaps the most important because it explains the overall set-up of analysis – the before-tax annual cash flows, the sale calculation, how to compute interest and depreciation, and how to compute taxes on the investment, both for annual cash flows and at sale. It also presents the steps for computing the multi-period return measures and how to understand the meaning of IRR and NPV. The course concludes with how to use real estate investment analysis responsibly.

Learning Objectives

• To review the overall setup for Discounted Cash Flow Analysis

• To discuss income and expense escalation

• To understand the steps for computing before-tax, tax, and after-tax cash flows from sale of the property

• To understand the multi-period return measures

• To understand how to use real estate investment analysis responsibly

Workload

The course will require 3-4 hours of work to be completed.

Course Format

The course will feature video tutorials, excel training, virtual meetings, etc.

Assessments

The course will includes quizzes after each video, excel tutorials, and a written essay.

Certification

Build Academy will issue course certificates with credits to anyone who successfully completes 80% of the course assessments. Course participants will receive a diploma for completing the eight courses in the Real Estate Finance and Investment program.

Accreditation

We are in the process of accrediting the course with the State of New York for CEUs (Continuing Education Units). At the moment, the course awards international CPDs (Credits for Professional Development).

Prerequisites

The course is for real estate professionals who would like to further advance into their career and also for the general public who want to learn the basics of real estate. Successful completion of the previous courses in the program is required.

Readings

Kristen Hunter, The Brookside Square Case Study, 2016

Recommended readings:

Richard B. Peiser and David Hamilton, Professional Real Estate Development: The ULI Guide to the Business, 3rd Edition (The Urban Land Institute: Washington, D.C., 2012)

William Brueggeman and Jeffrey Fisher, Real Estate Finance & Investments, 15th edition (McGraw-Hill, 2015)

William J. Poorvu with Jeffrey L. Cruikshank, The Real Estate Game (Free Press, 1999).

Professors

Course Staff Image #1

Richard Peiser PhD, Michael D. Spear Professor at Harvard GSD

Richard Peiser has been the Michael D. Spear Professor of Real Estate Development at the Graduate School of Design since 1998. He is also Director of the university-wide Real Estate Academic Initiative created in 2003. He was previously on the faculty at the University of Southern California (1986-1998) as associate professor of urban planning and development, director of the Lusk Center for Real Estate Development, and Academic Director of the Master of Real Estate Development Program that he founded in 1986. His courses: Real Estate Finance and Development, Field Studies in Real Estate, Planning and Urban Design, and Advanced Real Estate Development and Finance offer basic and advanced-level study of real estate at the GSD. He also taught the studios: Alternative Urban Pattern Prototypes: Looking at Pomona/Los Angeles, Newry, Northern Ireland—Revealing History in Urban Reconstruction, and Alternative Futures for the West Lake, Hangzhou, People’s Republic of China, as well as field studies in Texas, California, New Hampshire, Idaho, and Shanghai. He is directing the school’s activities in advanced education for senior real estate executives, notably the six-week Advanced Management Development Program in Real Estate.

Course Staff Image #2

Kristen Hunter, DDes Candidate at Harvard GSD

Kristen Hunter is a doctoral candidate in Real Estate Finance and Urban Development at the Harvard University Graduate School of Design (GSD), where she has taught Real Estate Finance, as well as Public and Private Development, since 2010. She received a Master in Design Studies with distinction in Real Estate and Project Management from the GSD, earning the Gerald M. McCue Medal for highest overall academic record and the Ferdinand Colleredo Mansfeld Prize for superior achievement in real estate studies. She also holds an M.A. in Medieval Chinese History from Cornell University and an A.B. cum laude in East Asian Languages and Civilizations from Harvard University. An experienced real estate development manager and LEED AP, Kristen has delivered a variety of infill projects in Boston’s inner city neighborhoods, and currently provides strategic advisory for complex urban redevelopment projects in domestic and overseas markets.

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