Every great deal starts with a thoughtful analysis.

Here are 3 things every underwriting model should have:

1. Accurate Renovation Timing Schedule

Some real estate transactions involve a “value add” strategy, wherein the interior units will receive cosmetic upgrades and the exterior of the property could even be upgraded.

Most commonly done, tenant leases expire, the tenant moves out, and the unit is then renovated while it is vacant.

Having the ability to model down units and control how many months it takes to renovate and remarket is an extremely accurate way to model your business plan.

Featured below, you can see 10 interior renovations start in Month 1. It will take 1 month to renovate the unit and 1 month for remarketing process. Therefore, the rent premium from these 10 units will not start until Month 3.

All of these timing inputs can be changed depending on how aggressive or conservative your assumptions need to be.

2. Summary Tab

Every great underwriting model should have a summary tab.

This saves the reader time by not having to do a scavenger hunt through each individual tab to view assumptions.

When you send an underwriting model to your partners, lenders, or investors, they should be able to easily view the summary tab and see the entire model simplified on 1 page.

3. Monthly Proforma

I’m a firm believer every underwriting model should have a monthly proforma.

You can clearly see operations month by month and you can make very granular changes if needed. The annual proforma is just a sum of the monthly view.

Is your underwriting model lacking these features?

These are just a few of the features that will be in our new Value-Add Multifamily Underwriting Model.

📈 After spending over a year building this extensive underwriting model, I am making this Value-Add Multifamily Underwriting Model available to purchase 9/1/23!

NDL readers will be first to know and will receive a massive discount. Stay tuned for more updates!

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📈 Chart of The Week

Can U.S. Renters Still Afford to Rent?

Income growth has not kept pace with rent growth since the onset of COVID-19, the median rent-to-income ratio among renters signing a new lease 2023 thus far is still relatively low at 23.1%.

That ratio is about on par with what the nation was seeing in 2011 and is a just few ticks above the 2019 showing closer to 21%.

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Areas of expertise:

• Multifamily Value-Add

• Multifamily Acquisitions

• Multifamily Development

• Debt & Financing Structures

• Mixed Use