Underwrite, value, and structure real estate deals
Underwriting, valuation, and capital structures for income property.
Written for students, analysts, and owners who need to run the numbers on an income property and defend them in the room. No prior real estate coursework is assumed.
Free and self-paced, open to anyone. No account or sign-in needed; progress saves in this browser.
- Chapters
- 10
- Practice questions
- 549
- Key terms
- 666
- Est. time
- 26hrs
Outcomes
What you will be able to do
- 01Build a pro forma from gross potential rent down to cash flow after debt serviceCh. 1 to 4
- 02Size a loan against LTV, DSCR, and debt yield, and name the binding constraintCh. 3
- 03Value a property by direct capitalization, discounted cash flow, and comparable sales, then reconcile the three into a rangeCh. 5, 6
- 04Model a GP/LP waterfall through preferred return, catch-up, and promoteCh. 8
- 05Test a deal with sensitivity tables, scenarios, levered IRR, and after-tax cash flowCh. 5, 6, 9
- 06Compare owning against leasing, and price a development against its spreadCh. 7
- 07Write the recommendation an investment committee can act on, with the downside stated plainlyCh. 10
Along the way: 36 interactive calculators built into the lessons, 549 practice questions that explain every answer, a 666-term glossary with flashcard drills, a spaced repetition queue that brings missed questions back, and a timed exam simulator.
Practice tools
Curriculum
Chapters
CHAPTER 1
What Is Real Estate, and How Does It Derive Its Value?
Foundations of real estate finance: what real estate is across its many forms, the characteristics that make real estate markets unique, why finance treats property as a cash-flow asset, who participates in the ecosystem, the three valuation approaches, and a step-by-step income waterfall from Gross Potential Rent to Effective Gross Income.
CHAPTER 2
How Do Real Estate Investments Produce Income? Contracts & Leases
How real estate produces income: the major property types and how each generates cash flow, how purchase contracts and leases create enforceable rights and allocate risk, the spectrum of lease structures, the lease provisions that drive underwriting, and the step from Effective Gross Income to Net Operating Income through cap rates and discounted cash flow.
CHAPTER 3
How Are Real Estate Deals Financed? Funding Sources & the Capital Stack
How real estate is paid for: the right side of the balance sheet. Debt and equity across the four quadrants; residential vs. commercial lending; loan sizing through LTV, DSCR, and debt yield; the capital stack from senior debt to common equity; GP/LP structures, promotes, and distribution waterfalls; private funds; policy-driven capital like LIHTC and Opportunity Zones; public REITs, mortgage REITs, and CMBS; and the full waterfall from NOI to Cash Flow After Debt Service.
CHAPTER 4
How Do You Forecast Real Estate Cash Flows? Modeling & the Pro Forma
How to build and defend a multi-year real estate forecast. Completing the cash flow model with unlevered and levered streams, IRR and equity multiple, and the FCFF/FCFE bridge; the fundamentals of forecasting, from T-12 data, CAGR, and driver-based assumptions to sensitivity versus scenario analysis and variance; building the multi-year pro forma line by line; as-is, stabilized, and pro forma NOI; the reversion and hold period; supporting every assumption with evidence; market research and due diligence; and stress-testing the completed model.
CHAPTER 5
What Is a Fair Price to Pay? Direct Cap, DCF, Mortgages & Risk
How to price a real estate asset. Direct capitalization (Value = NOI ÷ Cap Rate) and the three conditions that make it reliable; deriving cap rates by market extraction, band of investment, and the built-up method, with the Gordon Growth decomposition R = Y − g; building the unlevered DCF for a 60-unit multifamily; defending the terminal value; pricing commercial mortgages with the same machinery of payments, balances, balloons, lender’s yield, and effective borrowing cost; the eight real estate risks and their management levers; and the levered return metrics (IRR, equity multiple, and cash-on-cash) that measure what equity actually earns.
CHAPTER 6
How Do We Decide and Check Our Work? Triangulation, Decisions & Taxes
How to turn a valuation into a defensible decision and check it for reasonableness. Why honest valuation produces a range, not a point; the three approaches to value and what each captures; the four quick checks of price per unit, price per square foot, GRM, and implied cap rate; where practitioners source cap rates, comps, and replacement costs, and each source’s bias; reading method divergence as information; one- and two-variable sensitivity tables and coherent scenarios; NPV, IRR, MIRR, and the equity multiple on a worked $30M deal, with investment value vs. market value and the hold/sell/refinance/renovate rule; and the tax layer (property and income classification, depreciation, after-tax cash flow, and tax at sale) that can flip the verdict.
CHAPTER 7
How Do You Maximize Return and Minimize Risk? Development, Lease vs. Buy & Sale-Leaseback
Advanced risk-versus-reward strategies for creating and engineering value. The risk-and-return foundation of systematic, unsystematic, and systemic risk, CAPM, and expected NPV; the own-versus-lease decision treated as a separate real estate investment; the sale-leaseback as financing whose implied cost equals the owner return given up, versus a refinancing alternative; lease accounting under ASC 842 and why leasing’s reporting advantage shrank; the development spread and the build-versus-buy tradeoff across the risk spectrum; and how construction loans fund development, covering the development team, draws, retainage, interest reserves, guaranties, and sizing the take-out that repays the loan.
CHAPTER 8
Who Gets Paid, When, and How Much? GP/LP Waterfalls & Private Real Estate Equity
How private real estate equity is structured and split. The four-quadrant capital map (equity/debt × public/private); choosing the holding entity from sole proprietorship to LLC to C corporation; the general-partner and limited-partner roles, control, and downside risk; the three private-equity vehicles, namely syndications, commingled funds, and REITs, with the REIT qualification tests; the distribution waterfall and its four tiers; straight versus tiered promotes and European versus American waterfalls; a worked example tracing every dollar to LP and GP equity multiples and IRRs; deal-level versus fund-level timing and the clawback; and the GP fee stack and underwriting net of fees.
CHAPTER 9
How Does Managing a Portfolio Differ from Individual Assets? Risk, Scenarios & Diversification
Portfolio management theory applied to real estate. The four quadrants and the tools of portfolio theory: portfolio return, two-asset risk with correlation, CAPM, and the Sharpe ratio; decomposing return into the risk-free rate and the risk premium and probability-weighting outcomes; the 2022–2023 rate shock and how Fed policy reaches property through floating, fixed, spread, and valuation channels; a catalog of real estate risks with cap-rate-expansion math on a levered deal; building internally consistent Bear/Base/Bull scenarios; the loss-asymmetry math and the downside-protection toolkit; diversifying by property type, geography, and economic base, and its limits; concentration risk and the public–private lead-lag; and a pre-investment checklist that requires risk to be understood, priced, survivable, and compensated.
CHAPTER 10
How Do You Turn Complex Analysis into Clear, Decisive Action? Recommendations & Judgment
The capstone: turning complex, imperfect information into a clear recommendation for real people. Leading with the answer using the Pyramid Principle and Situation-Complication-Resolution; matching the format to the decision across the IC memorandum, the slide deck, and the verbal MAP framework; synthesizing due diligence into a Red-Amber-Green risk matrix and separating findings that disqualify a deal from those that reprice it; recognizing and debiasing anchoring, confirmation, overconfidence, loss aversion, and availability; communicating uncertainty with sensitivity tables, scenario analysis, and risk/mitigant pairs; working with imperfect people; and a pre-presentation checklist that makes a recommendation defensible and actionable.
Capstone exercise
Underwrite a deal end to end
The ten chapters teach the pieces one at a time. This is the whole job, once, on one deal, with nothing pre-solved.
ILLUSTRATIVE TEACHING CASE
Northgate Commons, a 120-unit value-add multifamily deal
You get the documents a buyer actually receives and nothing already worked out: an offering memorandum, a rent roll down to the unit, a trailing 24-month operating statement, comparables, and a lender term sheet. From those you normalize the income, size the loan against LTV, DSCR, and debt yield, project 5 years of cash flow to an exit, and write the investment committee memo.
The statements are not tidy, and the adjustments that matter are stated in the documents rather than flagged for you. The case is not built to resolve neatly either, so the recommendation the evidence supports may not turn out to be a yes.
- Units
- 120
- Months of actuals
- 24
- Comparables
- 8
- Hold modeled
- 5yrs
What is in the packet
- Offering memorandum, the full 120-unit rent roll, and a 24-month operating statement with its notes and disclosures
- 4 sale comparables and 4 rent comparables, a submarket survey, and an illustrative lender term sheet
- A blank model template and a build order, so the modeling is yours and the sequence is not a guessing game
- A completed solution and a self-check with tolerance bands, including what a near miss usually means
- An investment committee memo template with the rubric it is scored against
Illustrative teaching case. Northgate Commons, the market, the broker, the lender, the comparables, and every figure in this packet are fabricated for instruction. Nothing here is a real property, a real transaction, or a real financing quote.
Optional
Supplementary Modules
Standalone deep-dives that sit outside the core ten-chapter sequence. Optional, but useful context for the material.
MODULE
Interest Rates & the Macro Backdrop
An optional module on the macro engine behind real estate values: the rates that price every deal. The Federal Reserve, Treasuries, and the yield curve; SOFR and the post-LIBOR floating benchmark; credit spreads and the all-in mortgage rate; how rates reach property through cap-rate spreads, with the 2022–2023 rate shock as the worked case; and managing rate risk through fixed vs. floating debt, rate caps and swaps, and refinancing and maturity-wall risk.
MODULE
The DiPasquale-Wheaton Four-Quadrant Model & Market Analysis
An optional module on where rent, cap rates, and new supply actually come from. The canonical DiPasquale-Wheaton diagram unifies the space market (rent), the asset market (price), the construction sector (new supply), and stock adjustment into one equilibrium; a demand shock traced around all four quadrants shows why rents overshoot and supply arrives late; and it ties back to R = Y − g, replacement cost, and the real-estate cycle, closing with a supply-and-absorption checklist.
How this course works
1. Read one section at a time
Short, focused steps with worked examples and interactive calculators. Move with Continue or the arrow keys.
2. Check yourself as you go
Sections end with a knowledge check that explains every answer, right or wrong. Answers save as you go.
3. Finish with practice
Each chapter wraps up with a practice exam, and the course-wide Final Practice pools every question by topic.
Free and self-paced, open to anyone. Your progress saves automatically in this browser, so no account or sign-in is needed.
Go deeper
Sources & further reading
Everything behind the material: the research the chapters cite, the books worth owning, and the shows worth a commute. Open a shelf to browse.
Your instructor
Devon Coombs, CPA, MBA
Professor at Santa Clara University's Leavey School of Business. This is the same course he teaches on campus, adapted for self-paced online study.
“He provides every resource in the world to help his students, whether that be his own book, the videos he creates with great edits, or his own website, which helps you really drill down the information.”