What is a good Denver Multifamily Deal?

Question

I’m on the acquisitions team for a local development company based here in Denver. My job is to find development projects, but I come across a lot of other off market real estate deals that our company doesn’t focus on, mostly apartment buildings. I don’t necessarily want to pass on these as I know there are buyers out there, but I don’t know how MF buyers are valuing these deals. Is it merely a cap rate? Can any buyers out there give me some criteria that I should be asking these Seller’s to know if it’s a deal worth doing or not?

Tyler Gibson · Answer

@Taylor Jacobs it is not just cap rates but that has a place in the analysis. The value of MF properties is all based on what they produce in terms of revenue. So if there is an opportunity to come in and add value (increase rent or reduce expenses) then it might be a good deal. When you can do both it is even better. You can literally force appreciation in a commercial MF property by reducing expenses and increasing rents.

Chris Lopez · Answer

@Taylor Jacobs There's a lot that guys into it and many sellers will NOT accurate cap rates. It's amazing the lack of knowledge many owners have and then the data that the owner makes up.

I'm an active investor and have a lot of buyers looking for multis. We have more buyers than deals, which is typical in the Denver market. Currently, we have 15 unit apartment building, two fourplexes, a triplex and 1 duplex under contract now. All but the duplex are off-market deals.

There's a lot to cover when analyzing multi family. I'll send you a message about catching up. I'll be happy to share with you how underwrite to lock down some deals. We'll take everything from stuff that is completely abandoned needing a full rehab to 100% turnkey.

Jason Black · Answer

The past two webinars have discussed this topic of how to analyze a property and determine if it's a good deal. BP offers a rental property calculator for SFR, Multi-Family, and Commerical properties. This would be a good guide to determine the quality of the deal. Non-pro members get 5 free calculations. After the calculation is completed, it even produces an awesome property report that would help you present the findings to your company and potential lenders.

**Disclaimer: BP does not pay me nor give me a benefit in any way to plug their products or tools**

What is a good Denver Multifamily Deal?

What is a good Denver Multifamily Deal?

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