To much time of fancy summaries.

[Account Closed]

I will never understand why it is that when I want to evaluate a commercial multifamily property that I have to look at an executive summary that is 100 pages long with 20 of them being the nicest pictures you can see and 12 comps for the area. They give you pro forma of bringing in 100k for the year net.

Then when you finally see the year run financials the property has run for a least a year 35000 in the red a month, with maybe a month of 12k in the black. Just looked at one property where it was in the red over 300k for the years financial. And their asking top price for the property, even if I were able to pull a group together I would only offer maybe 40% of the ask price if that.

Am I doing something wrong in my analysis?

[Don Konipol]

It is the same reason good deals are never found under the listing "good deal". Most professional commercial real estate investors will pass on 9 of every 10 deals that are presented to them. Of the 1 in 10 worth looking at, they will actually buy 1 in 10 of these. So ultimately 1 in 100 deals presented is purchased.

With experience and knowledge comes the ability to reject unattractive deals more quickly. When just learning, it is better to read the complete deal summary, appraisal, title report etc. With knowledge gained from this and from visiting the properties, the investor will be able to make decisions quicker and get to the meat of the executive summary or appraisal quicker.

BTW, analyzing potential real estate deals is what takes up the majority of my time. While the actual negotiations is a lot more fun, the analysis is a lot more time consuming, and probably a lot more important.