Buying based off projected income

Multi-Family and Apartment Investing
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Buying based off projected income

Account Closed
Rental Property Investor · Vista, CA · Member since 2019 · 7 posts · 0 votes

Would you say it's fair to base your potential income based off projected future income vs actual current income to gauge your ROI. This is a just a numbers thing but also a make or break it for me!

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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
6y

Typically it's not very attractive with current financials but you have to go with those numbers to underwrite and figure out the best price to present to the seller. Definitely do a pro forma and gauge for market rents and other ways to add value into the property. 

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  • Bjorik Mutize
    Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
    6y

    Usually investors would underwrite at properties given currents to see how it is performing and then underwrite again with their separate assumptions during the hold. ie. where do you think you can take rents, expenses, financing, etc.

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  • Erik Hatch
    Rental Property Investor · USA · Member since 2018 · 325 posts · 222 votes
    6y

    Personally, I would take only the actual T12 numbers and even reduce them form safety. This gives me a good indication of value and what my offer would be. Then I would build my business plan based on that. Then I can see what my proforma numbers look like.

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  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Account Closed:

    Would you say it's fair to base your potential income based off projected future income vs actual current income to gauge your ROI. This is a just a numbers thing but also a make or break it for me!

    I like to use actual income and expenses from T-12 for expenses and T-3 for current economic occupancy. You can run pro-forms and projections but that is just educated guesswork.  

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  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    6y

    Typically it's not very attractive with current financials but you have to go with those numbers to underwrite and figure out the best price to present to the seller. Definitely do a pro forma and gauge for market rents and other ways to add value into the property. 

    [email protected]
    The Elle Group5152 Reviews
    WebsiteView Page
    2Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    6y

    As long as the numbers are mine and not seller Proformas I'm OK with that. I will often run numbers with actuals and then projections after rehab. 

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