Underwriting Commercial Multifamily

[Susana W.]

Hello BP

I'm getting off-market commercial multifamily leads and I would like to learn how to underwrite 8+ unit multifamily.  I would appreciate if you can share which calculator/spreadsheet do you use.

[Evan Polaski]

@Susana W.

I find the adventures in CRE spreadsheets to be fairly robust. Personally, I have seen and played with many of the "guru" sheets and find a lot to be desired, but at the same point if you are wanting a simply cash flow calculator, they tend to be fine.

When I see "would like to learn" though, I always like to reiterate that underwriting is part art and part science.

The science is the calculator and phone calls to get inputs.

The art is seeing something others don't.  Is it a market that actually rewards great design and your goal is to push rents higher by not doing the standard formulaic grey walls and whitewashed LVP?  Do you know the market inside and out, and understand things like being one block further away/closer to some draw actually makes a big difference in tenant demand?  That being on the eastside of the interstate creates more traffic flows and better visibility than the westside? etc