Buying Multifamily - Metrics and Methods for Analysis of many

[Will F.]

I'm currently looking to buy multifamily (apartments) in Southern California 4.5-6+ cap or South/ Central Florida 6+ cap (LA, Inland Empire, South East Fl etc)

I currently own manage a portfolio of about 40 units with some ownership.

Search: 15-50 units (this varies a lot...currently we're looking at south LA versus Inland Empire.)

So a little background on how I usually buy a property... I start with a wide net, first focusing on broad markets, then  like a funnel then focus on lesser, look at dozens in several focus areas

How do you guys generally do your broad multifamily searches? I have a Excel spreadsheets where I just plug in a lot of different metrics (below) for looking at dozens of properties at a time.  

Any suggestions on making these like-for-like comparisons for about a dozen or so properties?

Metrics:

ppsf price per sf

ppu - price per unit

SF

Class of property A - C (we're usually looking for B-C properties in B-C locations)

Class of locations A-C

down payment (different multifamilies have different amounts down especially if it's a value-add)

GRM - go to metric... I've noticed a lot of lenders use for their "quick" metric

1% rule (this is my first quickie metric)

CAP rate- this is so variable but in LA county lower income areas I notice about 30-40% depending on how much of a value-ad property we're dealing with (fixer) Often I just use 35% for repairs across the board and

IRR- this is more difficult to compute as it has so many variables-- usually a value-add property with major repairs/ rent raise will have a 50-100% IRR over a few years

Once I focus on just a few properties or if I'm going for more of a 'value add' property...I will plug in an IRR spreadsheet and make a bunch of assumptions, exit strategy etc. Usually, it's a higher IRR for value-add properties in LA but they involve more work.

[Henri Meli]

@Will F. Just curious ... Where do you get your numbers from? How many per week do you get? 

I use Michael Blank's SDA tool. I adapted it to my own check list and process. I'm only focus on value add assets. Stabilized properties are not of interest to me at this time.