Fraunhofer Institute for Industrial Mathematics ITWM
Fraunhofer Institute for Industrial Mathematics ITWM
Haus und Baufinanzierung Geld Symbol
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Datengetriebene Cashflow-Modelle: Besser planen und Risiken bewerten. Projekt mit der R+V Versicherung: Smarte Prognosen für Baufinanzierungen

Smart Forecasts for Real Estate Financing

In the project with R+V Insurance, we are developing a data-driven model for forecasting cash flows in real estate financing. It improves the planning of payouts and repayments and supports risk controlling through more precise, data-based predictions.

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Data-Driven Cash Flow Models: Better Planning and Risk Assessment

Project with R+V Insurance: Smart Forecasts for Real Estate Financing

Real estate financing is a core business for many insurance companies. However, processes and forecasts are still often driven by Excel models and manual workflows. Together with R+V Insurance, our data science team has developed a cash flow model that predicts payouts and repayments of real estate loans more accurately and flexibly.

R+V Insurance acts as a lender in the construction sector, providing loans for both private residential property and commercial real estate such as shopping centers and office buildings. Reliable forecasts play a key role in risk controlling, especially for accurately predicting payment flows.

Initial Situation: Complex Payment Flows, High Requirements

As a lender in the construction sector, R+V must continuously monitor,

  • how payouts from committed but not yet fully drawn loans develop
  • how repayments of ongoing financing evolve
  • the impact of future new business on capital requirements, liquidity, and risk.

Traditional Excel-based solutions quickly reach their limits.

Cash Flow Model: Precise Forecasts of Payouts and Repayments

A central element of risk controlling is the cash flow model developed together with R+V Insurance. It describes and forecasts payouts and repayments of real estate loans.

The Model Consists of Two Modules:

  • The payout module models both already approved but not yet fully paid out loans, as well as future, currently unknown financing.
  • The repayment module captures fully disbursed loans with ongoing amortization, as well as loans whose payout is not yet complete and whose repayment will only begin in the future. It also forecasts future new business. 
Chart comparing disbursements and forecasts
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Comparison of actual disbursements (green) with forecasts (blue).

Technically, a probabilistic, path-based approach is used to realistically model different future scenarios. This allows for individual customer requirements to be taken into account – such as the right to full repayment after ten years or the extension of existing loans. Traditional Excel-based solutions can usually only represent such cases to a limited extent.

Validation and Benefits: Greater Security for Capital and Risk Management

Validation based on historical data shows that the forecasts closely match actual cash flow patterns. The model thus provides a solid foundation for capital and liquidity management and helps R+V better assess interest rate and refinancing risks.

The cash flow model exemplifies the potential of tailored data-driven solutions. Similar approaches are also used in logistics for budget planning, for example in a cooperation project with an international logistics company.

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