3 Hour Condo/Rental Excel Test - What Can Be Expected

In a 3-hour condo/rental Excel test, the expectation would be to demonstrate a comprehensive understanding of financial modeling, specifically tailored to real estate development scenarios. Here's a breakdown of what can be expected in terms of detail for output, along with insights on the condo scenario square footage calculation:

Condo/Rental Excel Test Expectations:

1. Construction of Financial Models: You'll need to build separate financial models for both the condo and rental scenarios. This includes inputting provided data such as construction costs, lot square footage (SF) & Floor Area Ratio (FAR), construction timeline, target condo sellout and rental rates, expected retail rent, rental operating expenses (OpEx), and the debt/equity breakdown.

2. Detailed Output Analysis:

   • Internal Rate of Return (IRR): Calculate the project's IRR for both condo and rental scenarios to assess the potential profitability.
   • Equity Multiple (EM): Determine the equity multiple to understand how many times the initial equity investment could be returned over the project's life.
   • Yield on Cost (YOC): Calculate YOC returns to evaluate the project's efficiency in generating income relative to its cost.

3. Memo Creation: Summarize your findings, assumptions, and any relevant analysis in a concise memo. This should include a brief overview of the financial models and key takeaways from your output analysis.

Condo Scenario Square Footage Breakdown:

Your approach to calculating the sellable square footage for condos seems logical. Here's a step-by-step breakdown:

• Max Buildable/Gross SF: Start with the 100,000 SF based on the FAR provided.
• Loss Factor Adjustment: Apply a 20% loss factor for common areas (lobby, elevators, hallways, mechanical rooms), reducing the space to 80,000 SF.
• Retail Space Deduction: Deduct 2,500 SF for the ground-floor retail space, leaving 77,500 SF as the sellable square footage for condos.
• Retail Space Assumption: Assuming the 2,500 gross SF for retail is also the rentable SF, especially if it's leased to a single tenant on a triple net lease (NNN), is reasonable.

In such a test, accuracy, attention to detail, and the ability to work efficiently under time constraints are crucial. Ensure your models are clear, well-organized, and easy to follow, as this will also be part of the evaluation.

Sources: Basic Overview of the Consumer Sector, Life in Development - Expectations vs Reality, Life in Development - Expectations vs Reality, HOW DO YOU DETERMINE YOUR UNIT MIX?, Multifamily Rent Per Square Foot vs. Rent Per Unit