Updated about 2 years ago on . Most recent reply
Understanding Proformas / Deal Analysis
I'm a spec home builder, along with my husband. To this point we've stayed in our lane of doing ground up construction spec homes. That's been our niche. We have never used any lenders, we've never considered doing a JV project, or being a retail investor (I have to be honest, I don't even know what that means!!) We're starting to think that we may want to branch out and potentially get involved in other sorts of RE investments.
I'm looking for some resources where I can learn how to properly analyze deals, especially larger and more complicated deals with multiple sources of financing, multiple tiers of investors, rental income to consider, vacancy rates, etc. My husband and I have relied pretty heavily on "back of the napkin math" for analyzing our own deals, which worked fine when we're just using our own money, we're very familiar with all the costs involved, and nobody else is involved in the deal so there's just been no need to make it more complicated than that.
My husband has a relationship with a larger commercial developer who sent us the proforma on a building they already own and are planning to renovate / develop into apartments with retail space below. We're just dipping our toes in the water, trying to familiarize ourselves with their processes. When I looked at the proforma I was lost, it was all Greek to me! Any specific resources you can recommend (maybe a YouTube channel or something) that might help me make sense of this? I have seen a few other "deal analysis" spreadsheets from investors looking for a JV or a lender, even on here, and I just don't get what I'm even looking at with some of the terminology and acronyms ... Can someone offer some resources to simplify this a little? I'd even take an online course if it was well organized (and affordable, which they never are).