All Forum Posts by: Matthew Shay

@Dushyant Ravi Thank You and nice to hear from you! I appreciate hearing from a lender's perspective and I will make a note of that. Looks like you are underwriting on an individual and general level. What are you paying attention to when you are pulling information from the rent roll tab and CF tab for each individual property?

I am wondering if you would do anything else if the properties are operating differently. Let's say the expenses/unit aren't similar across the portfolio. Would you do anything different?

Also, was wondering if there are any articles written on this

I am looking at some multifamily portfolio deals. How would you underwrite multiple bldgs in a single portfolio. I have heard some say to underwrite each bldg individually. Others say if they get similar rents and expenses then you can underwrite those together. What do you think?

Interested to hear what rules of thumb do you use for multifamily. Right now trying to figure out payroll for a 47 unit. Also, do your rules of thumb change when you scale from 50-10-150-200 units?

Hi,

I was looking through the North America Cap Rate survey for multifamily and they are using a cap rate called Expected Return on Cost Cap Rate for value add. There is another cap rate they use called cap rates for stabilized properties which i get but can anyone explain what is the former about? I included a screenshot. The reason I am asking is that I underwrite conservatively by adding a basis point for every year the property is held. So if we are holding the property for 5 years and the prevailing cap rate is 8% then I would use 8.5 for the cap rate on the resale

Great suggestions@Rick Versace

I agree with @Dan Handford

@Andrew Caton are you looking for on recourse and that is why you are having an issue getting approved? Typically lenders for non recourse require the borrower to have a net worth that is equal or greater to the outstanding loan blance, have at least 1 year reserves for debt service and experience and or a track record. Please keep us posted and what you are doing to find a sponsor

@Immanuel Sibero well said in regards to the difference between "property cap rate" and "market cap rate." Thank you for your contribution. Great Discussion 

@Dushyant Ravi I will PM you

@Robert C.Yes had we only known what the the cap rate was for a given market without the price/unit we would be able to deduce that the price is increasing just by the mere given information that the cap rate is going down. However, there are specific events that I think it is useful to know what the price/unit is. For example, when you add the variable of price/unit and you see that its not moving for instance in Washington D.C. between 2016-2017 then an investor who is looking at it from that perspective should not be swayed to believe that the PPU in that market has increased just because the cap rate came down. Here the isolated element is the NOI and it is also a leading factor. I think it kind of tells a story about how the market is moving i.e. lower vacancies, higher rents