Cognoscere Ventures

The use of Argus is becoming increasingly popular and a lot of real estate investment firms are subscribing to the software. I think Argus is a fantastic tool due to its automated nature, speed and convenience. However, Argus is not without its limitations. I’ve experienced deals that needed to be rebuilt in Excel from Argus models because the deals were unique and unable to be tailored to fit the software. What’s more, relying on software robs investors of the opportunity for a deep understanding of why the numbers for a particular deal are as they are. Argus is a convenient tool which enables inputs to be ‘plugged in’ and automatically produce outputs, but it cannot teach you to think and analyse deals and numbers. By mastering financial modelling, an in-depth understanding about deals and the inter-relationships between different variables and assumptions is gained. This skillset helps an investor’s mindset and strong business acumen to be developed. The ability to look at models built by other people and figure out why the numbers do or do not stack up is also gained. No financial modelling automation tool can teach this. For that reason, financial modelling is a required test by most real estate investment and advisory firms. If you want to break into real estate private equity, investment banking or transaction teams within real estate advisory firms, passing a financial modelling test is a must. Argus is a useful tool for a pre-screening process and adequately replaces “back of the envelop” financial models. Argus can deliver initial results to quickly decide if a real estate deal is worth deeper analysis. Once this initial analysis is complete and a deal has been committed to, a detailed financial model built in Excel should be created as part of the due diligence and deal execution process.

Most free models online are of dubious quality. When I began teaching myself financial modelling, I looked for free models online, but couldn’t find any high quality models. Most models on the internet are functional at best, but not of an institutional quality. Most quality financial models for real estate have been developed in-house by private equity firms and are kept highly confidential. Quality financial models become highly prized intellectual property that is not available for free. This course is designed using hypothetical scenarios and best practices learned over years of working in the industry. This has been supplemented with tips and tricks offered from highly competent financial modelers and methods gained from experimenting with different approaches to modelling.

Modelling classes are significantly more expensive. A detailed guide combined with the hypothetical model allows students to learn at their own pace and use it as a reference to further develop their financial modelling skills.

Some people learn better from reading and doing rather than listening and watching. Learning financial modelling from a written guide and example model allows students to be meticulous with their learning and embed the knowledge more deeply. Knowledge that is hard-won stays with us for longer and is more readily accessed after breaks in learning. It is unlikely students will remember everything after the first review of the materials, therefore, having a written guide makes it simpler to revisit elements that need to be refreshed. Furthermore, becoming a successful real estate investor means getting comfortable with reading and analysing written information - reviewing other financial models, documents in the data room, reading and writing reports.

Due to the downloadable and IP nature of the course, a full refund is not available. If you are unhappy with the course and the materials provided, a 50% refund can be given as long as this has been requested within 30 days of making the purchase. The price of the course does not reflect the value of the model and associated guide, however, it is offered at a market friendly rate to enable access to people in the early stage of their career.

The first step is to look through the model and try to figure it out on your own to see to what extent you understand it. Next, to put the model and guideline side by side, ideally on a two screen desktop and comb through every detail, reading each section of the guideline. Once completed, practice building similar models or comb through models at your workplace using what you learned. Finally, complete the modelling test and review the answers. If you find that you struggle with the tests make sure to try them again. Practice is key.

This course is comprehensive and detailed enough to cover most scenarios found in real estate investing. However, just as no single maths course can teach you how to solve all maths problems, this will not show you how to build all financial models. It will provide you with a detailed toolkit for solving most problems by yourself. Occasionally you may encounter bespoke deals that have elements not covered by this course. However, once you’ve mastered the financial modelling techniques, are adept at solving problems learned from the course, and fully understand the asset you are building, then you can build most models you will need through your career in real estate investment.

The course assumes you have basic to intermediate knowledge of Excel and real estate. However, there will still be some explanations for the Excel formulas used along with some real estate concepts. If you are familiar with those concepts then you can skip these explanations.