In highly competitive and evolving industry landscape, it is critical for real estate players to develop sound financial modeling to be able to understand the bigger picture and analyze new market opportunities. Despite the growing importance of real estate financial modeling, majority of players still rely on Excel-based models. However, the problem is commercial real estate portfolios do not have a steady or a standardized stream of cash flow. Variety of lease structures with varying start and expiration dates result in complex and staggered cash inflow and reimbursements making it tedious and very challenging to create sound models only on Excel.
Whether you are commercial real estate company, property developer or investor it is imperative to model real estate transactions accurately as it is a key decision making tool and helps improve flow of information and visibility.
Ensuring higher data accuracy is critical
In order to build a reliable model, you need to feed in granular details and data from multiple sources. This could range from varying rent escalations, analysis of assets and liabilities, renewal possibilities, investment structures, tenant leases to revenues and expenses. Having said that, large amount of data increases complexity and in-turn makes the financial model more error-prone.
Using only spreadsheets for modelling can increase the likelihood of errors resulting in a poor/inaccurate financial model. Argus modeling can help overcome this challenge by reducing data errors. Higher data accuracy helps create a well-structured and robust financial model while providing granular clarity into the cash flow and its impact on property value.
Simplifying the model to improve usability
Building a multi-dimensional financial model requires incorporating tremendous amount of data, financial details, formulas to make it flexible and usable. Excel offers the convenience to expand the tables to include additional data as and when needed. However, adding multi-dimensional formulas in an Excel spreadsheet is tedious and challenging, that results in a complex model that is difficult to understand and use, besides the fact that it is also highly restrictive and error prone.
The best way to simplify, accelerate creation and minimize errors is to opt for Argus financial modeling. It not only helps cover all the bases to build accurate and detailed oriented model, its advanced features make it very user-friendly. It is way simpler to use and modify the model allowing various stakeholders to explore multiple options (what-if scenarios) to assess the valuation of any asset/portfolio quickly and easily.
Getting Argus modeling done by professionals
While more and more real estate players are utilizing Argus to build financial models, it is important to note that when it comes to financial modeling there is no one-size-fits-all solution. Different portfolios, markets, scenarios call for custom models that take these variables into account to provide meaningful insight.
Building such flexible and multi-dimensional Argus financial models require specialized training and skillset. Outsourcing this to professional services providers can help you not just explore the potential of Argus modeling but also bring in agility, speed and accuracy to your financial modeling and planning. In effect, instead of investing time in building the models you get to devote more time in using them to drive strategic outcomes and boost portfolio performance.
Springbord has a trained and certified team of experts who bring years of domain experience. Connect with us today to find out how we can help you unlock the true value of this powerful tool and help you gain deeper insight and make more informed-decisions.