Investor calculator to analyze costs in a 400 unit multi-family?

Question

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?

Roy N. · Answer

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.

Michael Le · Answer

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.

Robin Shelley · Answer

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?

Ray Lai · Answer

@Robin Shelley

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.

Best of luck.

Donald S. · Answer

@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.

Gino Barbaro · Answer

@Robin Shelley

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

Gino

Juan Vargas · Answer

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.

Robin Shelley · Answer

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?

Robin Shelley · Answer

Thank you very much Michael Le. I'll take a look at Michael Blank's Syndicated Deal Analyzer (SDA).

Juan Vargas was not specific and of no help, he just mentions "additional factors", whatever they are.

Investor calculator to analyze costs in a 400 unit multi-family?

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