Free download
Real estate waterfall model in Excel
A clean, three-tier IRR-hurdle waterfall: return of capital and pref, then two GP promote tiers. Change the yellow cells and every year, IRR and split updates. No sign-up.
Updated
Works in Excel, Google Sheets, Numbers and LibreOffice.
- LP IRR
- 13.8%
- LP equity multiple
- 1.81x
- GP IRR
- 25.6%
- Total GP promote
- $110,360
| Year | Cash | Tier 1 | Tier 2 | Tier 3 | LPs | GP total |
|---|---|---|---|---|---|---|
| 1 | $60,000 | $60,000 | $0 | $0 | $54,000 | $6,000 |
| 2 | $65,000 | $65,000 | $0 | $0 | $58,500 | $6,500 |
| 3 | $70,000 | $70,000 | $0 | $0 | $63,000 | $7,000 |
| 4 | $75,000 | $75,000 | $0 | $0 | $67,500 | $7,500 |
| 5 | $1,650,000 | $1,143,169 | $416,895 | $89,936 | $1,385,676 | $264,324 |
What is in the model
One workbook, two sheets. Read me explains the tiers and the limits. Waterfall holds the inputs, a ten-year timeline and the results. Inputs are yellow with blue text; everything else is a formula you can audit cell by cell.
- Tier 1, return of capital and pref: 100% of cash goes to investors until they reach the first IRR hurdle (8% in the example).
- Tier 2, first promote: cash splits 80/20 between investors and the GP until investors reach the second hurdle (13%).
- Tier 3, second promote: cash splits 70/30 after that.
- Results: LP IRR, LP equity multiple, GP IRR on co-invest plus promote, total promote, and a check row that must read $0 every year.
How the IRR hurdles work
Each hurdle is an account. It starts at the equity contributed, grows at the hurdle rate every year, and falls by what investors receive. Tier 1 pays investors until the first account is empty; at that point investors have earned exactly the first hurdle IRR. The second account does the same at the higher rate, net of the GP's share. This is why an IRR hurdle rewards early distributions: cash paid in year 2 clears more of the hurdle than the same cash in year 5.
How to use it
- Enter total equity and the GP's co-invest share. The model treats the GP's co-invest like any investor.
- Set the two hurdles and the two promote percentages from your term sheet or operating agreement.
- Enter each year's distributable cash, including the sale or refinance proceeds in the year they arrive.
- Read the results and the year-by-year split. Try a slower sale year to see how much the promote depends on timing.
Assumptions and limits
Annual periods, all equity in at year 0, one class of equity, no catch-up, no clawback, and no fees, taxes or reserves. Real agreements accrue from each contribution date, may run operating cash and capital events through different waterfalls, and often add a catch-up. For a catch-up and an equity-multiple hurdle, use the online waterfall calculator; for the concepts, read how real estate waterfalls work and the definitions of a hurdle rate and a promote.
When the spreadsheet stops being enough — many investors, classes, capital calls, dated contributions — CREAssets runs the waterfall on the real ledger and previews each distribution before you approve it. See waterfalls and distributions.
Related calculators
- Real estate waterfall calculator
Return of capital, compounding pref, GP catch-up and two promote tiers — LP and GP splits instantly.
- Preferred return calculator
Simple vs compounding, cumulative vs non-cumulative, with yearly distributions — pref accrued, paid and still owed.
- IRR and equity multiple calculator
Enter equity, yearly cash flows and sale proceeds — get IRR, equity multiple, cash-on-cash by year and average annual return.
- Cash-on-cash return calculator
Annual pre-tax cash flow over total cash invested — the yield on your equity, with monthly cash flow.
Waterfall model questions
Is the Excel waterfall model really free?
Yes. The download needs no email or sign-up. Use it for your own deals, change any formula, and share it.
Does it work in Google Sheets and Numbers?
Yes. It uses only standard functions (MIN, MAX, SUM, IRR, IFERROR), so it opens in Excel, Google Sheets, Numbers and LibreOffice and recalculates there.
Does the model include a GP catch-up?
No. It is a three-tier IRR-hurdle waterfall without a catch-up. For a catch-up and equity-multiple hurdles, use the online waterfall calculator, or read our guide to GP catch-ups.
Why IRR hurdles instead of a simple 8% pref on capital?
An IRR hurdle accounts for when cash is paid: the hurdle balance grows at the hurdle rate each year and falls by what investors receive. Many operating agreements define their promote tiers this way.
Can this replace my operating agreement or fund administrator?
No. It is an annual illustration. Your agreement may accrue from each contribution date, treat operating cash and capital events differently, and add fees, reserves and more tiers. In CREAssets the waterfall engine runs on your dated contributions and distributions.
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