What is your BEST way to do a quick assessmen of a deal for syndi

Question

Hi,

Just beginning my new journey syndicating Apartment buildings. I have a partner who is a broker in 12 states, so he throws me a ton of deals to analyze. In the partnership my job is deal analyzation and finding the funds. I have a VERY detailed deal analyzer that works well, but I was hoping the more seasoned folks out there have a few tricks up their sleeves. Anyone?

Chris Tracy · Answer

@Meghan McCallum- the FASTEST way is to have your partner vet them with one simple question:

What are the proven value add opportunities?

• Have some upgrades been done and as a result, was the owner successful in raising rents for those units?  If so, how many are left to do?
• Is the property distressed?
• How good of a job is the property management company doing?
• Who's paying the utilities?  Can a RUBS program be implemented?

Long story short- How much meat is on the bone for the investors?

If the value adds are not there, why even spend time underwriting?

Especially if you are swamped with deals... Food for thought.

Yousif Abudra · Answer

@Meghan McCallum

I am assuming you are analyzing multifamily for buy & hold rather than a repositioning play.  We evaluate deals in all 50 states, and what I've developed is similar to @Chase Keller, which is two spreadsheets - one for initial screening, and another for a fuller, more detailed analysis.  If a deal can't get past your initial screening, why would you commit your valuable time and effort into performing a full analysis?

Initial Screening:

Develop an Excel spreadsheet that allows you to enter the standard inputs for each cost item for each state.  So, for example, you will have 12 columns with each column representing a state.  Under that state, enter the costs, either as a % of revenue or a $ amount, that correspond to that state.  For example, in CA my heating oil costs are $0, whereas in Maine, they are $50/unit/month.  Then, build a dropdown menu in Excel so that you can select the state from your, enter the number of units, and enter the revenue and you will have a quick financial spreadsheet to see if it is worth further diligence.

Full Analysis:

You likely already have a handle on this, but this is where you would invest the time and research into each cost item, confirm revenue assumptions, and develop your investment plan.

The most difficult part of syndicating deals today is finding the deals.  Which means you need to look through many, so efficiency matters.  Hope this helps.  If you'd like to chat further, happy to do so.

Chase Keller · Answer

I use a couple different spreadsheets. One that's pretty simple and I'm able to plug in numbers very quickly to see if it's something I'm interested in. Then a more detailed one for the deals that I'm going to fully analyze.

I'd love to see what you're working on anyway. We should chat sometime!

Chris Tracy · Answer

I just sent you my group's criteria.

Meghan McCallum · Answer

@Chris Tracy What are your buyers looking for? Stabilized or add value buildings?

Chris Tracy · Answer

Ok cool.  I just didn't want you to get hung up on underwriting everything that comes on to your plate.... That's awesome.  If you need a buyer for anything, let me know!

Meghan McCallum · Answer

@Chris Tracy that was how I was doing it plus looking at comparable rents and looking at per unit cost.

This property: Built 1982, shingle roofs 6 buildings, only amenity is a pool

-Property is 75% newly renovated

-It IS distressed as the vacancy was in the 20%+  range when I heard of the deal

-a new management company has been in for 4 mos and has raised the tenancy to 88% currently

-it is in a suburb of St. Louis and is surrounded by three hospitals with two super Walmarts in the area

- Local comparable rents are $30-$120/m more

- Utilities are paid by tenants except water/sewer, garbage

So, it sounds like I am doing a quick review similar to what the successful BP members on this feed are doing. Chris, if you have any other suggestions or if anyone else uses other specific items they use in a quick look...I'm all ears.

Meghan McCallum · Answer

@Yousif Abudra I also love your business model, no financing. That is truly awesome. And transformative effect on communities and building stronger neighborhoods...I love it.  Its absolutely what we have been doing...on steroids. *cheers and applause*

Meghan McCallum · Answer

Absolutely @Chase Keller! @Yousif Abudra, I do have a good grasp on a full analysis. My broker/partner is licensed in 12 states so he throws deals at me very rapidly to analyze and determine which ones we will contact to ask  for greater details on than their MLS sheet. You seem so much father along having a state by state idea of what costs are generally speaking, per unit. I would prefer a repositioning play, but we get really good financing because my partner also is a partner in a mortgage company. So, holding for up to ten years isn't the worst idea either. I love the idea because I so value data collection and analysis. I'm just far from having something like that created...but I now see the need to create it.

We aren't going after the really big monsters of buildings, price above $1.2M to about $6M so we stay out of the way of the the big boys and can find those poorly performing mom and pop buildings. In my time investing I have been focused on small MFs and taking on add value plays. I am looking to do the same with these larger buildings. I would love to chat more. You seem like someone I could learn a lot from. But, I want to know if there was anything I could offer in return? Are there currently any problems you are having or any connections to certain people you'd like to meet? Perhaps I could be of assistance to you that way?

Meghan McCallum · Answer

*I also hope you all know that I left the "t" out of assessment as "syndi" seemed to be a better fit. I apologize for the slaughter of words due to the character handicap.

What is your BEST way to do a quick assessmen of a deal for syndi

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