How long does it take to learn CRE financial modeling?
I’m currently taking a CRE financial modeling bootcamp on Udemy from Justin Kivel.

It’s pretty overwhelming since I’ve never done it before but I do understand the language. 

How long does it take to get comfortable with modeling so that I can use it as a talking point during interviews and take the next step and apply what I’ve learned in a position that requires it.
[{"id": "i4cliyj", "text": "To learn? Maybe a week or two. That will get you to a point where you should be able to talk about high level questions in interviews. Though I don\u2019t ever recommend bringing up modeling yourself, just answer whatever technical questions they ask at a high level.\n\nYou\u2019ll only get better doing it a thousand time on the job to really learn the interworkings.", "replies": [], "depth": 1}, {"id": "i4f5pg6", "text": "Like with many things, it depends on how deep you want to go and what your background is. \n\nTo learn to build out the basic line items (rent revenue, other income, expenses, NOI, purchase/sale, cash flows), probably a week or two. \n\nTo add in a layer of debt, another week. \n\nTo build a good 3 tier waterfall, probably two weeks at least. They are difficult to understand and replicate without practice. \n\nHere\u2019s the thing about modeling: \n\nMost CRE deals (90%) can get away with modeling off of a \u201cone pager\u201d. A single basic tab with everything on it: assumptions, cash flows, return metrics, amort. table, etc. \n\nWhere modeling gets difficult is when there is an actual **need** for a complex model. Let\u2019s say you\u2019re doing a $200M master plan community, where there are 3 equity partners, a self-funded construction loan, interim loan, perm loan, and sale. Also, in this community, you have retail, office, and multifamily, which means several revenue/expense streams, as well as different lease structures. There\u2019s no way you could get away with a simple model here, as there are so many moving parts. \n\nAnd here\u2019s the kicker- you build this massive model out, and then 2 weeks later, your boss comes in and says not only the assumptions of XYZ have changed\u2026 but also the contracts. So now you have to go change a formula here, here, and\u2013 oh fuck. You just broke the model. Something is wrong and you know it\u2026 but you have no idea where the errors are. Good luck. If it\u2019s a bad enough fuck up, you\u2019ll get canned. \n\nI will add, if a shop is doing huge deals, they typically have one or more guys who are excel gurus and know their shit in and out. Becoming that guy takes years of practice and failure. So usually, you won\u2019t have to deal with the super difficult nuances of the model, but it\u2019s still good to know your way around excel.", "replies": [], "depth": 1}, {"id": "i4gyxv3", "text": "What exactly are you trying to learn?  Based on his Youtubes I would say Justin is pretty clueless.  I would say you are wasting your money if you are paying more that the cost of a book.", "replies": [{"id": "i4h491s", "text": "It was $30", "replies": [{"id": "i4hh58k", "text": "Well that's not a big loss.  The real problem is learning incorrect information and using it for years.  That could cost you a lot.  Seriously, most of these internet/Youtubers have no idea what they are talking about.  They are trying to make money from the internet, not from real estate investing.", "replies": [{"id": "i4hl40s", "text": "What\u2019s incorrect about his teachings lol", "replies": [{"id": "i4i5a7s", "text": "[https://www.youtube.com/watch?v=xK\\_S4D2AA2s](https://www.youtube.com/watch?v=xK_S4D2AA2s)\n\nHe is trying to explain IRV but he is only correct on one of the three calculations.\n\nYou do not use a cap rate to calculate NOI and you do not use cap rate to calculate a return.\n\nActually there is never a reason for an investor to TRY to calculate a cap rate.  \n\nSeriously, if you don't understand the basics of valuation then you should not be trying to educate others for pay.", "replies": [{"id": "i4iiy5o", "text": "Can you explain what cap rate is used for then? Isn\u2019t it to measure risk of an asset?", "replies": [{"id": "i4irujs", "text": "A cap rate is derived from the concept of perpetual bonds: the owner of the bond pays a certain amount money upfront for the bond and subsequently receives cash flow, in the form of an interest payment, for as long as they own the bond. The yield of the bond is cash that returns to the investor (as a percentage) in the form of interest.\n\nThe formula to calculate the yield is: Current Yield = Annual Interest Paid / Market Price of Bond\n\nThe general formula for a cap rate is *Cap Rate = Annual NOI / Value of Real Estate. *Note that for this formula to work for real estate, we need to put cash aside every year to extend the life of the asset. Here, the industry assumes CAPEX is equal to depreciation, offsetting above the line and below the line expenses.\n\nA cap rate is essentially a perpetual bond formula for the real estate industry. It's important to note there are couple different types of cap rates out and each has its own specific use.\n\nReported Cap Rate = Cap Rate Reported by Seller/Buyer/other party to transaction. When looking at comparable properties, this can help guide estimated value of the property using the Income Comparison Approach.\n\nEstimated Going-in Cap Rate = Yr 1 NOI, under your ownership/ Purchase Price. This helps establish a baseline when looking at your terminal cap rate during underwriting.\n\nTerminal Cap Rate = Terminal NOI (first yr of NOI after your ownership / expected sales price). The Terminal Cap Rate is used to estimate the resale value of the property beyond the projection period in a discounted cash flow model.\n\n\nOne follow up on cap rates.\n\nA cap rate, similar to yield, is the markets signal of implied risk.\n\nExample: Apples S&amp;P credit rating is AA+ and yields a ~2.64% whereas Netflix\u2019s credit rating is B+ \u201cjunk\u201d and yields ~6.4%.\n\nSimilarly Class A infill apartments in the US trade at 4.65% cap rates vs Class C suburban apartments trade at 6.24% cap rates (per CBRE\u2019s 2018 2nd half cap rate survey).\n\nSay that you have 2 apartment buildings that both generate 100,000 in NOI. One is Class A Infill and the other is Class C suburban.\n\nClass A Infill: 100,000/4.65% = $2.15M value\n\nClass C Suburban: 100,000/ 6.24% = $1.60M value\n\nWhile the properties generate the same amount of NOI, investors are willing to take a lower yield because the implied risk is less in a Class A infill location vs a Class C suburban location. In other words, the Class A Infill apartment\u2019s 1.59% lower cap rate creates 550,000 more in value than the Class C suburban apartment \u2014 all because investors feel more confident of future NOI.\n\nThat said, by understanding what cap rates are of comparable properties in the market, you can quickly see if the deal you\u2019re underwriting is generating similar yields to the market. If there is a disconnect, your job is to tease out what is causing the discrepancy (ex below market rents, below market expenses, deferred maintenance, etc) and take that into consideration in your underwriting.\n\nThe next step would be to evaluate whether you feel that cap rate on your investment will move during your hold. To compress cap rates, you can evaluate whether it makes sense to do value add work to convert it to a nicer product and raise rents, assuming there is demand. Additionally cap rates can compress as a neighborhood begins to gentrify as more investment is flowing into the neighborhood and investors are comfortable with a lower yield. The latter is very hard to determine and is never taken into consideration in our terminal cap rate.\n\nTLDR: Cap rate = Implied Risk", "replies": [{"id": "i4m71yw", "text": "&gt;Say that you have 2 apartment buildings that both generate 100,000 in NOI. One is Class A Infill and the other is Class C suburban.  \n&gt;  \n&gt;Class A Infill: 100,000/4.65% = $2.15M value  \n&gt;  \n&gt;Class C Suburban: 100,000/ 6.24% = $1.60M value  \n&gt;  \n&gt;While the properties generate the same amount of NOI, investors are willing to take a lower yield because the implied risk is less \n\nWhat makes you think one asset has a lower yield?  In your example the Class A NOI is selling for **$21.51**=$1/4.65% and the Class C is selling for **$16.03**=$1/6.24%.  As an investor I am generally paying more because I believe I will have a higher yield.", "replies": [], "depth": 8}, {"id": "i4n00kp", "text": "What you should be looking for are deals with the best risk adjusted return.", "replies": [{"id": "i4qs3om", "text": "Nothing wrong with that plan.  The problem is that cap rates do not measure risk or return even though the internet Gurus want you to believe that.", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}, {"id": "i4irwtg", "text": "No, cap rates come from an income approach to value.  It is called direct capitalization.  If investors are buying at a 10 cap in your market it means that they are paying $10 per possible dollar of NOI. V=i/r..The V is the VALUE you are trying to solve for.  The i is the NOI the property is capable of producing at market and the r is the capitalization rate that investors HAVE paid in your market.\n\nCap rates can be indicative of risk and returns but they do not measure either.  In a 7.78% cap rate market I can factually state that you paid $12.85=$1/7.78% for each possible dollar of NOI.  You cannot tell me the risk or the \"return\" from a cap rate number.  This is basic NON INTERNET CRE.", "replies": [{"id": "idw74gp", "text": "Justin keeps it simple enough to understand at a fairly basic to intermediate level. Which is exactly what anyone should want starting out. I would 100% listen to Justin Kivel.", "replies": [{"id": "idwfgoh", "text": "But he does not know what he is talking about.  He ignores anyone calling him out.  \n\nSee if he is willing to discuss what his information is 100% correct.  He will never agree to that.", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i4h0yme", "text": "Take CCIM 101.", "replies": [{"id": "i4h4b5q", "text": "What\u2019s that", "replies": [{"id": "i4h7v0t", "text": "https://www.ccim.com/education/course/ci101-financial-analysis/?gclid=Cj0KCQjwxtSSBhDYARIsAEn0thQdqIHgUXrzxn6LYeo1oGS4BjH5\\_a8YOzJm3FQ7KF2Y1rtsKtiSy5UaAkG1EALw\\_wcB", "replies": [{"id": "i4hl5bc", "text": "Does it look good on resume?", "replies": [{"id": "i4hliba", "text": "CCIM is tremendously valuable for anyone in CRE, in my opinion.", "replies": [{"id": "i4hv15r", "text": "Do you think my company will reimburse me for this?", "replies": [{"id": "i4hvsco", "text": "You'd have to negotiate that with them.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i4irh2u", "text": "CRE modeling really started to click when i re-took finance classes in b school. If you understand how lbo models work you can then layer on nuances of cre.", "replies": [], "depth": 1}, {"id": "i5ehymp", "text": "You should check out Top Shelf Academy. It's created by financial analysists who do financial modeling everyday and they explain it in a way that isn't overwhelming! \n\nIt shouldn't take too long to get comfortable with the basics and you'll continue to learn when you apply and eventually get a position that requires it!", "replies": [], "depth": 1}, {"id": "i6cri68", "text": "I like Real Estate Financial Modeling, by Roger Staiger. I bought it after taking his class through ULI. FWIW", "replies": [], "depth": 1}]