underwriting ( commercial apartments) 13+ units

5 Replies

Hello,

I want to start practicing how to underwrite Deals. I understand NOI, CAP, GOI, GSI , DCR , OP-Exp ( and i'm sure theres more). but I need some deals to look at so i can practice determining whether something is a deal or not... Loopnet doesn't help out very much because not all the brokers show all the information. Can someone point me to a source that has the needed information up ( including Rent-Rolls etc..) or do I need to contact the broker for the Financial statement?

Any help would be greatly appreciated.

@Jeffrey Mcintyre add NPV and IRR to your list. Brokers and owners aren't going to share their rent-rolls and P&L statements just because you ask. Most of them with larger deals will want to see proof of funds before releasing such information. Once you know how to set up your model and analyze a deal, it just a matter of inputting the numbers that will "eventually" be given to you, and doing your due diligence to confirm those numbers are correct and no expenses have been left out. To assist you in this, I would suggest your purchase Frank Gallinelli's excellence book, "What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Key Financial Measures". You can get a copy on Amazon.

David,

I got the book a few days back and so far its been an Eye-opener.....I can definitely see how calculating NPV can save a company from wasting money on a project that would not earn them any money, or maybe even cause them to lose money...wow..if it wasn't for your post I would have never took that into consideration.. I'm quite certain that after I finish this book , that my confidence in Commercial RE investing will increase.--thanks again.

I also see that he has "Secrets to Financing Your Real Estate Investments" --what are your thoughts on that book?

David,

Quick question, whats you take on Real Estate investors jumping into the business, "Learning -As-They -Go", over spending some time educating themselves to THEN implement what they've learned?...I'm  afraid to end-up in a state of "Analysis  Paralysis" ... granted i've only been studying for about 4 months..and i don't know if thats a long time or not.

Since you're an experienced investor...in your opinion...whats a reasonable amount of time to be studying to be a real estate investor?

I only ask because I've searched the internet day and night, reading forums from people that have been investing and they don't understand some of the foundations of investing( key-terms)..I find that some of these individuals were the same ones who jumped in and made unnecessary mistakes that didn't have to happen if the spent a little more time studying.