Foundations of Real Estate Financial Modelling, Second Edition is specifically designed to provide the scalable basis of pro forma modelling for real estate projects. The book introduces students and professionals to the basics of real estate finance theory prior to providing a step-by-step guide for financial real estate model construction using Excel. The book introduces an innovative new financial metric, P(Gain), which quantifies the probability of a Return of Capital and answers the most basic question for investing, "What is the probability I get my money back?". 

This new second edition has been fully revised and expanded. The book is separated into three functional units: (1) Real Estate Valuation Basics, Theory and Skills, (2) Real Estate Pro Forma Modelling, (3) Real Estate Pro Forma (Enhancements). New and enhanced Chapters cover: 

  • Interest rates
  • Amortization
  • Single- and multi-family unit
  • Development module
  • Rent roll module
  • Waterfall (equity bifurcation)
  • Hotel, retail/office and townhouse.  

In addition, this new edition includes problem sets and solutions at the end of each chapter as well as case studies underpinning the chapter topics. Further chapters are dedicated to risk quantification and include scenario, stochastic and Monte Carlo simulations, equity waterfalls, and adding U.S. GAAP financial statements to existing real estate pro forma models.

This book is the ideal textbook for a Real Estate Finance class, providing the theoretical basis of real estate finance as well as valuable modelling skills for the workplace. This book provides individuals with a step-by-step instruction on how to construct a real estate financial model starting with a new spreadsheet. The resultant model is portable, scalable, and modular. A companion website provides the pro forma models to readers as a reference for their own constructed models.


Companion web material available at: https://pgainllc.com/ ;

part 1|160 pages

Real estate valuation basics, theory, and skills

chapter 1|40 pages

Real estate basics

chapter 2|37 pages

Asset valuation defined

chapter 3|14 pages

Real estate characteristics defined

chapter 4|15 pages

Interest rates

chapter 5|52 pages


part 2|228 pages

Real estate pro forma modelling

chapter 6|60 pages

Single-family rental (single page)

chapter 7|49 pages

5-unit multifamily

chapter 8|35 pages

“N”-unit rent roll

chapter 9|24 pages

Development page

chapter 10|33 pages

N-unit for sale

chapter 11|25 pages


part 3|150 pages

Real estate pro forma (enhancements)

chapter 12|41 pages

Accounting statement(s)

chapter 13|43 pages


chapter 14|25 pages

Stochastic modelling (Crystal Ball)

chapter 15|39 pages

Optimization (OptQuest)