Why Real Estate and REFM
The Value of Real Estate
Real estate investment and ownership creates and preserves wealth, enables financial independence, and drives positive change. It offers us the following unique benefits:
- The use of the bank’s and other people’s money. Real estate is the most accessible of the investment types, because we do not need to personally have a lot of cash or assets to get started.
- Lenders are often more willing to finance a sound real estate investment than even a great business idea because real estate investments always involve collateral of indisputable value: land. With the aid of leverage, we can typically purchase something 5 times the amount of cash we have to invest.
- Similarly, investors like real estate because it is tangible, easy to understand and offers attractive tax benefits. The ease of conveying the potential of the property allows us to raise equity capital with relatively less selling and storytelling than for a non-real estate investment opportunity.
- Protection from inflation. Intelligently written real estate leases include rent escalations tied to an inflation Index, which protect the value of our cash flows in an inflationary environment. While the spending power from our savings account erodes, real estate cash flows offer consistent real rates of return.
- Shielding from income taxes. Depending on the investment and the applicable accounting standards, we can often decrease our taxable income by significant sums. For instance, the US allows for shielding of income through the writing off of interest cost, through the depreciation of building structure and capital improvements, and through the amortization of loan points.
The Power of Financial Modeling
The world’s top investors and developers model their real estate investments. Financial modeling allows us to:
- Create value and set ourselves up for success. Understand what will drive extraordinary returns in each transaction, and prioritize efforts to achieve optimal results, even in a down market.
- Avoid “deal fever”. Every investor and developer can tell you stories of a time when the temptations of a bad deal were nearly irresistible. Don’t fall into this trap! Good financial modeling is the reality check that we depend upon to remain consistently disciplined and successful.
- Hone our story. Get more traction with lenders, investors and partners by demonstrating the soundness of an investment thesis with a professional analysis everyone can follow. Busy decision makers are constantly presented with new opportunities, so make the most of their limited time.
- Go in with our eyes open. Evaluate and mitigate the risks inherent in each opportunity that a more superficial analysis fails to identify.
- Keep our team on the same page. Avoid costly ambiguity and disagreements by accurately and objectively measuring the expenses and profits to be apportioned to ourselves and our partners.
The REFM Edge
REFM allows you to:
- Save time and money. Be more productive by adopting a platform designed specifically to let you learn, analyze and present more easily, quickly and efficiently.
- Avoid costly mistakes. REFM training content, Valuate software and Excel templates are born from real transaction analyses. Our team has spent thousands of hours in Excel debugging formulas to ensure accuracy down to the smallest detail – because we know that when an investment is on the line, getting the details right is critical to success.
- Validate your expertise. The REFM Certification Program In Excel For Real Estate allows you to prove and let others know of your level of knowledge and skill in Excel-based analysis.
- Leverage custom solutions. REFM designs and tailors its training and tools to your needs. With self-study training options and analysis solutions for every asset type, REFM provides you with the right tool for every job, letting you model for success.