La Jolla, CA · Member since 2016 · 14 posts · 1 vote
Which RE investor calculator do I use to analyze all costs in a complete pro forma correctly, before buying a commercial 400 unit multi-family property?
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Robin Shelley This is gonna sound awful mean or passive aggressive but if you’re looking at a 400-unit complex you shouldn’t be asking the question. Even at a (cheap) $20K a unit it’s $8M purchase price. You throw around that kind of cash the pro-forma (or any deal analyzer) is a small piece of the pie.
You can plug some numbers into a pro-forma, juxtapose them against a T12, and see where that gets you. At 400 units you’re almost certainly dealing with professional management, part-time and full-time employees, maintenance on amenities (pool, gym, etc.) so it’s a little tough to put all of those into a simple deal calculator. If you do, odds are there will be huge differences. Then you have to figure out the “why”.
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
8y
Michael Blank's Syndicated Deal Analyzer (SDA) is good but don't just buy it and start plugging the numbers from the pro forma in. You really should learn how to underwrite and analyze these deals 'correctly'. But having a calculator will help you better understand it.
Investor · Houston, TX · Member since 2015 · 233 posts · 188 votes
8y
Hi @Robin Shelley, like Michael mentioned don't use the pro forma to underwrite any property. If you are looking at a 400 unit property, you should really have a good understanding of what it takes to analyze it. Underwriting a property is more than just inserting numbers into a spread sheet, there are many additional factors that you should take into account.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Robin Shelley This is gonna sound awful mean or passive aggressive but if you’re looking at a 400-unit complex you shouldn’t be asking the question. Even at a (cheap) $20K a unit it’s $8M purchase price. You throw around that kind of cash the pro-forma (or any deal analyzer) is a small piece of the pie.
You can plug some numbers into a pro-forma, juxtapose them against a T12, and see where that gets you. At 400 units you’re almost certainly dealing with professional management, part-time and full-time employees, maintenance on amenities (pool, gym, etc.) so it’s a little tough to put all of those into a simple deal calculator. If you do, odds are there will be huge differences. Then you have to figure out the “why”.
if you don't know how much it costs to run a property in your market, then contact either am mortgage broker or a broker that deals with agency debt and ask them what expenses are in the market. Our market of Knoxville, TN costs us around 4500 per unit per year to run a property of that size
La Jolla, CA · Member since 2016 · 14 posts · 1 vote
8y
Thanks Michael Le, I bought Michael Blank's Syndicated Deal Analyzer (SDA), but haven't used it yet.
Thanks Andrew Johnson, for the advice. Is a T12 - a phonetic support text input system?
Thanks Scott Meitus, I may contact you.
Thanks Gino Barbaro, for the advice.
Which RE investor calculator do I use to analyze all costs in a complete pro forma correctly, before buying a commercial 400 unit multi-family property?
La Jolla, CA · Member since 2016 · 14 posts · 1 vote
8y
Thanks Jay Riaz, for voting for me.
Which RE investor calculator do I use to analyze all costs in a complete pro forma correctly, before buying a commercial 400 unit multi-family property?
Accountant · Saint Louis, MO · Member since 2017 · 409 posts · 362 votes
8y
@Robin Shelley I wish you the best of luck, and whether you're asking about a 4 unit or 400 unit you should feel free to ask it here on BP. A few people have given good responses and I hope that helps. I don't know your particular situation, but it does appear that you'll want more help than just an analyzer for this. To that point I suggest contacting a commercial broker for the area that this investment is in, probably start with one of the big guys.
Oh and T12 in this instance is the Trailing 12 months actual expenses from the seller, hard to come by sometimes, but for larger properties, it should be as simple as contacting the accounting dept.
La Jolla, CA · Member since 2016 · 14 posts · 1 vote
8y
Thanks Mr. Donald Shaver for the good wishes and telling me about T12, being trailing 12 months. That's been included in pro forma's that I've seen.
Phil Christian is such a negative, jealous, narcissist guy, I wonder why he's on BiggerPockets (BP)?
Which RE investor calculator do I use to analyze all costs in a complete pro forma correctly, before buying a commercial 400 unit multi-family property?
Thanks to Mr. Michael Le, I bought - Michael Blank's Syndicated Deal Analyzer (SDA), an investor calculator, I'm studying how to use it now. It seems meant to save me time, my most precious commodity.
Thanks Donald Shaver for the good wishes and telling me about T12, being trailing 12 months. That's been included in pro forma's that I've seen.
Phil Christian is such a negative, jealous, narcissist guy, I wonder why he's on BiggerPockets (BP)?
Which RE investor calculator do I use to analyze all costs in a complete pro forma correctly, before buying a commercial 400 unit multi-family property?
Thanks to Michael Le, I bought - Michael Blank's Syndicated Deal Analyzer (SDA), an investor calculator, I'm studying how to use it now. It seems meant to save me time, my most precious commodity.
Robin Shelley
Which BiggerPockets forum did you see my request?
Robin:
I do not see Mr. Christain's response as fulfilling any of those adjectives you have exercised. Remember, you are purchasing a business, not a piece of property. A 400 unit residential complex is essentially a multi-million dollar business - if you have experience running an enterprise of that size, then you will simply/only need to become familiar with a new business sector. If you do not have such experience, but have the capital to purchase a business of this size, then you can also afford to hire someone who has the experience and understands the relationship between the moving parts.
Anyone can plug numbers into a spreadsheet or software application, but without a thorough understanding of how the numbers interact; what type of results the analysis should produce; and what is easily fixed vs a long expensive issue vs unfixable, you could loose a very large shirt.
Yes, it is your shirt, but Mr. Christain was merely trying to caution you against rushing into something you may not fully appreciate.
Hey a lot of people are giving you good advice but you're taking it the wrong way. If buying properties was as easy as plugging in a few numbers on a spreadsheet, everyone would be rich. It's understanding the assumptions behind the numbers thoroughly and being able to manage the difficult situations that will inevitably arise that you weren't aware of that will make the deal a winning one.
If you don't know what a T12 is and you have the cash to buy a 400 unit commercial and want to consider converting it to Section 8, you need to realize how much of a high risk endeavor that is before committing that type of capital.
Education is more than asking a few questions a BP. Due diligence will save you when you realize how fake pro forma numbers usually are.
Roy N., you obviously have an inferiority complex; please stop writing to me,
you're a waste of my time.
If you have the power to harm me by calling me a bot or troll, do your worst.
It will just prove you're an idiot.
What are both the advantages and disadvantages of putting an apartment building into section 8 housing?
Robin
Dear Mr. Shelley:
There is no reason for the ad hominem postings. It is absolutely fine to disagree with or simply ignore advice provided to you here on BP, but you are expected to conduct yourself with a modicum of decorum and respect for the other participants.
Since I am the target of your insultive comments, I have not removed your post(s), but have asked another moderator to review your conduct.