ABSTRACT
"Price" is the clearing amount an asset will sell for in a competitive market. "Value" is the individual amount a specific buyer is willing to pay or a specific seller is willing to receive. This chapter describes that "Real Estate Valuation Basics, Theory, and Skills", provides the basis of understanding the output, i.e. cash flow diagrams, for real estate financial models. It details the financial modelling of real estate pro forma models. Finally, the chapter advances the valuation basics, structures of cash flows to common templates, and optimizes solutions and physical structures. The value in a real estate asset is simply the cash flows that it can attract, i.e. the leases that will be signed for the project, plus any/all residual value at time of sale. The cash flows are derived from active management of the project and attracting tenants who sign leases and thus produce cash flows.
