Anyone has tried or had knowledge or experience with subscription to “MFA Underwriting”, if it’s a credible company and have heard of any reviews about it?
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
1mo
Never heard of it until this post. Devil is in the details, but my guess is with appropriate prompting you can get the same from Claude.
As I have mentioned many times on the forums, there is an art and a science to underwriting. The science is building a DCF model in excel that can spit out cash flows, IRRs, etc. While this takes some technical skill to build from scratch, it is easily taught or bought.
The art is the actual assumptions. How much can you push rents for that property in that market, with those tenants. What improvements are needed to get those rents, i.e. will tenants pay more for USB outlets, do you need to convert to in unit laundry? And how much will those improvements cost. How much is insurance going to cost, but equally important, how much will the premiums increase year over year.
The model will spit out numbers no matter how realistic or unrealistic your inputs are. It is mastering those inputs that takes a lot of time and experience, and ultimately make the biggest difference.
And, for any service like this, I would want to know who is behind it. Per the FAQs, it says MFA Underwriting is run by a "real multifamily GP"... But who? And how much guidance will they be providing on the accuracy of your inputs and does this "real GP" actually know what they are talking about.
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 850 votes
1mo
Never used MFA Underwriting myself, so I can't vouch for it directly. What Evan said matches what I've seen too, the software just builds the model, the real skill is in the assumptions feeding it. When our co-investing club vets a sponsor's underwriting, I care less about what tool they used and more about how they justify their rent growth and exit cap rate against recent comps. If a subscription tool forces you to document those assumptions clearly, it's worth it. If it just spits out a number, it's not.