Beyond spreadsheets with real estate financial modeling tools

More than a year ago RPR decided it was time to upgrade what it offered for analyzing real estate investment opportunities. Based on years of REALTOR® feedback, we scoured the internet and trade show floors to assess what was available and began narrowing down our list of potential partners. One of those companies, Real Estate Financial Modeling, LLC, (REFM) built a platform called Valuate® that seemed to not only meet but exceed many of our wants, so we ran a test group that gave us the thumbs up to move forward with a partnership. From that point Founder/CEO Bruce Kirsch and the REFM team have worked non stop to expand this platform and we wanted to share with you a little about this journey.

Bruce Kirsch
Founder and CEO
Real Estate Financial Modeling, LLC

Nathan Graham: When we first partnered, Valuate® “just” offered the long term hold analysis. What enhancements have happened since?

Bruce Kirsch: As you hinted, we started off with a very capable but somewhat limited system compared to what we have now. You could look at cash flows and investment returns for any income producing property, which remains the core of what we do today, but a lot of improvements have been made, many directly from RPR user feedback. Below are the highlights.

  • Flip mode – This was basically a subtraction of functions from the core long term hold analysis and a repackaging effort. We wanted to build something that was easy to grasp and provided users with the key ratios needed to make sure they understood the risks of a project.

  • User Interface Overhaul – With the interface changes mobile use became a reality and timed perfectly with the addition of RPR Commercial to the mobile app. Now users can do an analysis from their phone while on site.

  • Back of the Envelope Analysis – BOTE analyses as they are known allows users to see the value of land and backsolve for a purchase price with calculations changing in real time as you add assumptions.

  • Multi-Family Rent Roll is the most recent. Originally the system was analyzing the property level cash flows as opposed to zeroing in on individual units in the space. But some practitioners needed to be able to break things out by individual tenant allowing someone to understand the performance of each unit individually. Also includes a value add function showing what happens when you renovate a space and are able to collect higher rents or to replace the original acquisition level debt with a better rate once the incomes are stable.

NG: I think I know the answer to this, but what was the most difficult feature to implement and what made it so complicated?

BK: The user interface update was a massive project where we basically rebuilt the entire platform. This was a huge process that included testing on multiple screen sizes and making small tweaks to ensure a consistent feel across all devices. However, the most challenging was the most recent which called us to retrofit the old multi-family analysis process to include the new rent roll and value add features.

: With that trip down memory lane in mind, what do you see as the next headache to take on?

BK: Well hopefully we have learned a lot from these other enhancements that will help us move forward with a smoother path. But, the next thing on the list is to complete the Back of the Envelope (BOTE) analysis suite for the other commercial property types.

As if your plate isn’t already full with your software build, I understand you’ve also committed time to co-author a textbook?

BK: Yes, indeed that’s true. I was the editor of Dr. Peter Linneman’s Fourth Edition of Real Estate Finance and Investments: Risks and Opportunities and I am currently co-authoring the Fifth Edition that will be released in 2018. It’s a neat project to be a part of as the textbook has traditionally supported over 100 top colleges and universities and numerous companies in advancing their financial and investment strategy.

One of the things that piqued our initial interest in Valuate® was your real estate experience. Will you share a little about how you got started?

I have always had a curiosity about real estate, but never studied it. So when I arrived in Philadelphia to attend Wharton Business School I wanted to focus on a career that would have me in an industry with long lasting, tangible products and naturally became more drawn to the sector. So in 2005 I obtained my MBA in real estate and started my career in Washington D.C. with a developer focused on land acquisition and condo development.

That was an interesting time to get into the industry. How did it go?

Well, it was the best time in the world for a short period, but when the party stopped I needed to figure out what was next. After a short attempt at starting my own company, I found myself back in the development world focused again on analysis and searching for the hidden insights amongst all the calculations and formulas. Ultimately my love for real estate and investment analysis helped form the idea that became REFM.

So to say you’re dialed into the industry is an understatement, I’m curious as a participant in both the real estate space what is your take is on the overall commercial technology sector?

I think the most drastic change has come with the adoption of platforms being developed using API programming. Historically, in order to expand the functionality of a platform you would have to build it or buy it. Now we have the third option of API integrations, which allow one platform to seamlessly pass a user into another, like we have within RPR. This is creating a lot of excitement.

To close what is one CRE tech company that you are intrigued by most right now?

I was blown away by which comes out of the architectural side of the industry and focuses on zoning in New York city. It allows you to instantly draw a 3D model of a potential building on any site. For us, it is interesting because it ties into Valuate’s BOTE calculators which can do the financial analysis for the project.

Do you use Valuate and have a story to share, or maybe an idea to improve the system? Feel free to comment below

2 replies
  1. James Orr
    James Orr says:

    I’ve been developing an entire suite of real estate financial modeling tools that models investment strategies (not just a single property). It works with single family homes, duplexes, triplexes, four-plexes as well as a variety of commercial properties. Instead of just modeling a property, it allows you to model when you buy, sell, refi properties as part of an overall plan. Are you all planning to implement those types of features in your software at any point? Thanks in advance.

    • Nathan Graham
      Nathan Graham says:

      Hi James, RPR didn’t build the Valuate platform it was built by Bruce Kirsch with Real Estate Financial Modeling, whom we interviewed for this post. I can’t speak for their teams product path, but at this time Realtors® are very happy with their product.


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