Waterfall models in real estate projects are one of the most difficult concepts to understand. Cash flow from a development or investment project can be split in a countless number of ways. A waterfall is a method of splitting profits among partners in a transaction that allows for profits to follow an uneven distribution. The waterfall structure can be thought of as a series of pools that fill up with cash flow and then once full, spill over all excess cash flow into additional pools.

This Excel model contains 2 types of waterfall methods: the first Waterfall distributes profits based on a pro rata basis between the investor and the sponsor, effectively sharing the risk between the two.

The second one distributes profits first to investors until they get back their capital and preferred returns, and then starts distributing profits to the sponsor, effectively minimizing the risk to the investor, and increasing the risk to the sponsor.

Reviews Add a review
No reviews yet

More From Big4WallStreet

Browse our top rated business templates. See All
Sales Commissions Dashboard
 This model will allow you to plan your commission structure and monitor the performance of your salespeople versus company targets…
Dynamic Arrays in Excel
Dynamic Arrays (“DA”) allow you to work with multiple values at the same time. Dynamic Arrays are only available in…
Self Storage Financial Model (Buy Upgrade Operate Exit)
Considering investing in a self-storage facility? This might be an easier way for entry-level real estate investors to get into…
Self Storage Financial Model (Construction, Operations & Exit)
 Use our Financial Model to plan the Self-Storage construction, and subsequent rental operations for several years before exiting your investment.…
Fast Food Chain Financial Model
The financial model presents the business case of a startup fast-food chain. The model accommodates up to 20 outlets with…
Start Up Nursery School Financial Model
 Start Up Nursery School Financial Model presents the case of an investment in a nursery school and its operations. The…
See All