📈Underwrite Multifamily Deals in <10 minutes

As promised, here’s this month’s deep dive into underwriting multifamily deals in 10 minutes or less. This topic has been a game changer for my clients, and I’m excited to share the details with you!

What You Get

This article covers everything you need to know about quickly underwriting multifamily deals, including:

- How to quickly screen a deal in 10 minutes of less

- The exact steps you can take to underwrite more deals (in less time)

- Metrics to evaluate to determine if a deal is worthwhile

Quickly Underwrite Deals (5 steps)

• Input Key Property Details

  • Enter total unit count, average rent, average square footage, and planned hold period (e.g., 5 years).

  • Set an exit cap rate to establish a baseline for initial analysis.

• Develop a Basic Pro Forma

  • Outline the business plan, including planned rent increases, renovation costs per unit, and total CAPEX.

  • Estimate major income and expenses, factoring in anticipated economic losses for initial renovations and long-term stabilized vacancy rates.

• Enter Debt Terms

  • Define loan assumptions, including loan-to-cost ratio, interest rate, amortization period, and any interest-only terms.

  • Ensure CAPEX financing is included in debt if applicable.

• Analyze Projected Returns

  • Review unlevered and levered returns, targeting metrics like IRR, equity multiple, and cash-on-cash return.

  • Adjust the purchase price if necessary to meet return thresholds.

• Evaluate Metrics

  • Calculate the stabilized yield on cost and compare it to the market cap rate. Ensure it has a favorable spread, indicating strong value creation potential.

  • Evaluate other metrics like DSCR, GPR, and breakeven occupancy rate.

Video

Want to see this strategy in action? Watch this 6-minute video where I walk you through the exact steps to quickly screen a multifamily deal.

If you’re ready to take your underwriting skills to the next level, feel free to book a call with my team.

My partner Mike will walk you through the exact strategies we are using to win deals and give you free advice for how you can improve your underwriting skills.

Use this link » Schedule your time here.

Talk soon,  

Justin

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