Advanced Acquisition Model-REAL 4061

-This project showcases a detailed acquisition model I built from scratch as part of the REAL 4061 – Real Estate Finance course at Marquette University. The goal was to evaluate the financial viability of purchasing a 20-unit multifamily apartment building located on the Eastside of Milwaukee. It was designed to simulate a real-world underwriting process, taking into account detailed rent rolls, expense assumptions, and financing terms.
-The assignment was part of REAL 4061, a course focused on practical real estate investment and modeling techniques. Acting as the “sponsor,” I was tasked with using a given offering memorandum and creating a functional acquisition model that would help determine a feasible purchase price aligned with a target IRR. The scenario was rooted in a simulated but realistic investment decision for a small multifamily property.
-Goal: The goal of the project was to build a financial model that analyzes a multifamily acquisition and determines a maximum purchase price that achieves a 16.0% project-level IRR.
-Duration: This project spanned approximately two weeks, allowing time for research, model development, and iteration based on feedback.
-Problem: The primary challenge was to determine whether a $2.0–$2.4 million property acquisition would meet a target 16.0% IRR with only $75,000 in equity and investor backing. The project required translating complex real estate investment criteria into an Excel-based underwriting model.
-Action: I developed a custom model using Excel that accounted for several key narratives: Growth, vacancy, concession assumptions, Operating expenses, capital reserves, CapEx etc.
My approach began by breaking down the offering memorandum and rent roll, mapping out cash flow projections, and then validating each formula against expected real estate finance outcomes.
-Result: The final deliverable was a fully functional, investor-ready acquisition model, which determined the maximum offer price to achieve a 16.0% IRR. The model could adapt to sensitivity variables and serve as a decision-making tool for future acquisitions. It represented a major leap in my Excel modeling skills and my understanding of real estate valuation mechanics.
-Teamwork: This was an individual project, and I handled all modeling, assumption breakdowns, and documentation. However, class discussions and feedback from peers during office hours helped shape better assumptions and validation techniques.
-Research & Insights: Understanding the implications of interest-only periods on cash flow stability. Another key insight was understanding how minor changes in exit cap rate and expense growth affect IRR. Lastly, I learned the importance of building in capital reserves and disposition costs for realistic projections.
-Challenges: The biggest challenge was building a clean, logical spreadsheet from scratch—particularly in constructing a multi-tier waterfall for sponsor/investor splits post-preferred return. Balancing detail with clarity took several iterations.
-Final Takeaways: The project was a success in terms of both learning outcomes and deliverables. I gained hands-on experience in real estate underwriting and investment analysis. My biggest takeaway: small changes in assumptions can significantly impact an investor’s decision, and building models from the ground up is the best way to deeply understand those mechanics.