COMMERCIAL REAL ESTATE LEARNING CENTER
Real Estate Finance
Understand how commercial properties create cash flow, how debt changes the deal, and how investors measure value, risk, and return.
Use this practical guide as a learning path from market analysis and proformas through investment metrics, discounted cash flow analysis, and commercial lending.
Market analysis · Proformas · Investment metrics · DCF · Commercial loans
A SIX-PART GUIDE
Follow the financial story
Read from beginning to end, or jump directly to the topic you need.
THE FOUNDATION
What is real estate finance?
Real estate finance connects a property’s market, leases, operations, and capital structure to the cash flows it can produce.
In commercial real estate, finance helps investors, lenders, developers, brokers, and appraisers understand whether an opportunity is financially viable and how value, risk, and return are connected.
The analysis usually starts with the market, moves into a property cash flow forecast, and then uses return measures, discounted cash flow analysis, and debt metrics to evaluate the investment.
HOW THE PIECES CONNECT
The financial model follows the deal
Before you can calculate a return, you have to understand the market and forecast the property cash flow. Each step builds on the one before it.
01
Understand the market
Location, zoning, supply, demand, and comparables shape the assumptions.
02
Build the proforma
Forecast income, expenses, capital costs, and property cash flow.
03
Measure performance
Use cap rate, cash-on-cash return, and other ratios to interpret the forecast.
04
Apply DCF analysis
Use present value, NPV, IRR, and MIRR to account for timing.
05
Understand the debt
Evaluate loan payments, DSCR, debt yield, and financing risk.
CHAPTER 1 · MARKET ANALYSIS
Understand the market
Market analysis informs the rent, vacancy, growth, and exit assumptions that ultimately shape a property’s cash flow and value.
START HERE
Why market analysis matters
See why the market comes before the financial model and how it shapes the assumptions you use.
CHAPTER 2 · CASH FLOW FORECASTING
Build the real estate proforma
A proforma is the cash flow forecast for a real estate investment. Before you can value a property or calculate returns, you have to forecast income, expenses, capital costs, and financing over time.
FREE EXCEL MODEL
Real Estate Proforma Template
Build a commercial real estate cash flow forecast in an unlocked Excel model.
CHAPTER 3 · RETURN METRICS
Measure investment performance
Once the proforma is built, simple ratios can help you interpret the property’s income, price, and annual return. They are useful shortcuts, but they do not fully account for when cash flows occur.
QUICK CALCULATORS
Check the core return metrics
Use our free calculators to check the measures most often used to screen and compare property investments.
CHAPTER 4 · TIME VALUE OF MONEY
Apply discounted cash flow analysis
Discounted cash flow analysis accounts for the timing of money. Present value, NPV, IRR, and MIRR help you compare cash flows that occur at different points in the investment.
CHAPTER 5 · COMMERCIAL DEBT
Understand commercial real estate loans
Most commercial properties use debt. Loan payments, amortization, DSCR, debt yield, and lease rollover affect what a property can support and how financing changes investor risk and return.
FREE CALCULATOR
Model a commercial mortgage
Calculate loan payments and review how principal and interest change over the amortization period.
CHAPTER 6 · PUT IT TOGETHER
Work through real estate finance case studies
See how market assumptions, property cash flow, valuation, financing, and return metrics come together in practical commercial real estate analyses.
MULTIFAMILY
Apartment Investment Analysis
Follow an apartment acquisition analysis from assumptions through returns.
INDUSTRIAL
Industrial Warehouse Analysis
See how an industrial property is underwritten and evaluated.
OFFICE
Office Building Analysis
Work through the cash flow and investment analysis for an office property.
PUBLIC FINANCE
Tax Increment Financing (TIF)
See how TIF project cash flows and financing are analyzed.
KEEP LEARNING
Learn the concepts. Then put them to work.
Build practical CRE finance skills with our self-paced courses, model complete property cash flows with PMX Proforma, or keep a library of free templates, calculators, and guides within reach.