Thoughts on Sensitivity Tables and Equity Multiple Figures

[Adam Taylor]

Hi Everyone,

I am looking to start investing in SFH to 4 plexes. As I am building out my pro forma, I keep running into this headache as to whether I need to incorporate sensitivity tables. I pulled a pro forma from Rob Beardsley (Founder of Lone Star Capital). Obviously, I have no intention to start investing in large apartment complexes (Anything larger than 50 units) or incorporate LPs, but curious to hear everyone's opinion on sensitivity tables along with using equity multiple figures. I feel like I only need to incorporate DSCRs, NPV, IRR and of course growth rates (both expense and rent).

[Evan Polaski]

@Adam Taylor, these are all great and good, but like Chris noted, are you going to use them?

I find a lot of times, particularly syndicators, build out things like this and various graphs, dot plots, etc to prove to make a case for LPs. 

At the end of the day, as others noted, if it is already built and not taking any additional time for you, great.  But if you are trying to teach yourself pivot tables instead of hunting for deals or managing the properties, then these are a detriment.

The thing with any analyses you perform, they are ultimately done for the benefit of the people viewing them. In your case, since you are using your own money, then you should build out what you want to see. Rob is building these to appease investors (most of whom will likely never look at or even request this information), but some will, so he has them. For you, if you want to see DSCR, NPV, IRR, equity multiple, cash on cash, whatever you are primarily using to compare one deal to another, that is what you should use.