3.1 CRE Valuation: NOI, Cap Rates, GRM & DCF Explained
- 9 Sections
- 35 Lessons
- 35 Quizzes
Why Valuation Is the Most Important Skill in CRE
- Lesson 1.1: Why Income Drives Value in CRE (and Not What You Think)
- Quiz 1.1: Why Income Drives Value in CRE (and Not What You Think)
- Lesson 1.2: The Three Approaches: Income, Cost, and Sales Comparison
- Quiz 1.2: The Three Approaches: Income, Cost, and Sales Comparison
- Lesson 1.3: Why Two Identical Buildings Trade at Different Cap Rates
- Quiz 1.3: Why Two Identical Buildings Trade at Different Cap Rates
- Lesson 1.4: The Investor's Equation: Price = NOI ÷ Cap Rate (And Why That's Only the Beginning)
- Quiz 1.4: The Investor's Equation: Price = NOI ÷ Cap Rate (And Why That's Only the Beginning)
Building NOI from Scratch
- Lesson 2.1: Gross Potential Rent vs. Effective Gross Income
- Quiz 2.1: Gross Potential Rent vs. Effective Gross Income
- Lesson 2.2: Operating Expenses: What Lives Above and Below the NOI Line
- Quiz 2.2: Operating Expenses: What Lives Above and Below the NOI Line
- Lesson 2.3: The Capital Expenditure Trap
- Quiz 2.3: The Capital Expenditure Trap
- Lesson 2.4: Understanding the Pro Forma: Market vs. Underwritten Assumptions
- Quiz 2.4: Understanding the Pro Forma: Market vs. Underwritten Assumptions
- Lesson 2.5: Building a 12-Month Pro Forma from Raw Rent Roll Data
- Quiz 2.5: Building a 12-Month Pro Forma from Raw Rent Roll Data
Cap Rates, What They Really Mean
- Lesson 3.1: Cap Rate as a Yield and as a Pricing Mechanism
- Quiz 3.1: Cap Rate as a Yield and as a Pricing Mechanism
- Lesson 3.2: Why Cap Rates Differ by Market, Asset Class, and Vintage
- Quiz 3.2: Why Cap Rates Differ by Market, Asset Class, and Vintage
- Lesson 3.3: Cap Rate Compression vs. Expansion: What Drives Each
- Quiz 3.3: Cap Rate Compression vs. Expansion: What Drives Each
- Lesson 3.4: Going-In vs. Exit Cap Rate: Why the Spread Determines Your Returns
- Quiz 3.4: Going-In vs. Exit Cap Rate: Why the Spread Determines Your Returns
- Lesson 3.5: Reading Cap Rate Surveys and Applying Them to a Specific Deal
- Quiz 3.5: Reading Cap Rate Surveys and Applying Them to a Specific Deal
GRM, The Quick Screen Tool
- Lesson 4.1: Gross Rent Multiplier: Formula and What It Actually Measures
- Quiz 4.1: Gross Rent Multiplier: Formula and What It Actually Measures
- Lesson 4.2: When to Use GRM (Quick Filters) vs. When You Must Use Cap Rate/DCF
- Quiz 4.2: When to Use GRM (Quick Filters) vs. When You Must Use Cap Rate/DCF
- Lesson 4.3: GRM by Market and Property Type
- Quiz 4.3: GRM by Market and Property Type
- Lesson 4.4: Calculating Implied Value from GRM and Cross-Checking Against Cap Rate
- Quiz 4.4: Calculating Implied Value from GRM and Cross-Checking Against Cap Rate
DCF Fundamentals, Building a 10-Year Hold Model
- Lesson 5.1: Why DCF Beats Static Valuation for Value-Add Deals
- Quiz 5.1: Why DCF Beats Static Valuation for Value-Add Deals
- Lesson 5.2: The Five Inputs Every DCF Needs
- Quiz 5.2: The Five Inputs Every DCF Needs
- Lesson 5.3: Building the Cash Flow Waterfall Year by Year
- Quiz 5.3: Building the Cash Flow Waterfall Year by Year
- Lesson 5.4: The Exit: Cap Rate Selection and Terminal Value
- Quiz 5.4: The Exit: Cap Rate Selection and Terminal Value
- Lesson 5.5: NPV vs. IRR: What Each Tells You
- Quiz 5.5: NPV vs. IRR: What Each Tells You
Discount Rates, Risk, and the Cost of Capital
- Lesson 6.1: What the Discount Rate Represents (Your Required Return)
- Quiz 6.1: What the Discount Rate Represents (Your Required Return)
- Lesson 6.2: Building Up a Discount Rate from Risk-Free Rate + Risk Premium
- Quiz 6.2: Building Up a Discount Rate from Risk-Free Rate + Risk Premium
- Lesson 6.3: Why Core Office and Opportunistic Industrial Have Different Discount Rates
- Quiz 6.3: Why Core Office and Opportunistic Industrial Have Different Discount Rates
- Lesson 6.4: Sensitivity Analysis: How a 50 bps Change in Exit Cap Destroys or Creates Value
- Quiz 6.4: Sensitivity Analysis: How a 50 bps Change in Exit Cap Destroys or Creates Value
Reconciling Value, The Appraiser's Logic
- Lesson 7.1: Why Appraisers Weight the Three Approaches Differently for Different Asset Types
- Quiz 7.1: Why Appraisers Weight the Three Approaches Differently for Different Asset Types
- Lesson 7.2: Market Value vs. Investment Value: They're Not the Same
- Quiz 7.2: Market Value vs. Investment Value: They're Not the Same
- Lesson 7.3: Distressed Pricing vs. Stabilized Value and the Gap Between Them
- Quiz 7.3: Distressed Pricing vs. Stabilized Value and the Gap Between Them
- Lesson 7.4: How to Present a Valuation Range Professionally
- Quiz 7.4: How to Present a Valuation Range Professionally
Capstone, Value a Real Multifamily Deal
- Lesson 8.1: Setup: Meet the Deal
- Quiz 8.1: Setup: Meet the Deal
- Lesson 8.2: Analysis: Build the NOI and Cap Rate Valuation
- Quiz 8.2: Analysis: Build the NOI and Cap Rate Valuation
- Lesson 8.3: Decision: The DCF Upside Scenario
- Quiz 8.3: Decision: The DCF Upside Scenario
- Lesson 8.4: The Pro Lens: Professional Recommendation and Final Decision
Final Exam
Get valuation right and the rest of CRE follows. Get it wrong and no amount of hustle saves the deal.
It looks like a wall of math from outside. The method is four tools used in order: build NOI, read what a cap rate prices, screen with GRM, then model a ten-year DCF. A module on discount rates ties it together, and you reconcile all three approaches into one number.
Eight modules, 35 written lessons, 132 practice questions, and a graded final exam with a certificate. The capstone values a real multifamily deal. Self-paced, no expiry date. Yours to finish on your own timeline.
Defend a value line by line.
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