Underwriting expenses and a management company

Underwriting expenses and a management company

Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes

Hello BP,

I recently analyzed a couple of apartment deals and asked two PM companies to estimate expenses on these properties. The numbers were different, of course, so here is the question:

If I use a higher number in my proforma I arrive to a lower offer price, have lesser chance of getting my offer accepted, but then I have a choice of two PMs and potential savings on expenses by selecting a cheaper PM.

If I use a lower expense estimate, I can increase the offer and have a higher chance of winning a deal, but then I only have one PM to work with.

How do I solve this dilemma? 

Thanks

Nick

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  • Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
    10y

    Is one of the PM companies Wehner MF?   Seriously, they seem to be killing it in the DFW market, and I was impressed w/ the due diligence they performed in short order on a bid I recently made on a 175 unit complex.   I'm likely to hire them when/if I sponsor a deal.

  • Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    Yes, Chris, one of them is Wehner. I like them too but using their numbers in underwriting leaves no room for maneuver and no choice of other PMs. 

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