Underwriting 4-Plex like Commercial Multifamily

[Snehann Kapnadak]

Hi All,

Is it realistic to underwrite a 4-plex the same way as you'd underwrite a small commercial multifamily property (more than 4 units)? I've been using Michael Blank's Syndicated Deal Analyzer and was wondering if I could use it for 4 plexes as well, since I'm trying to syndicate a 4plex from family and friends (I don't have that much capital and can't provide sweat equity to partner with someone). For example, for commercial MFH I typically implement the following from his analyzer:

• Conservatively estimate expenses as 50%
• 2% annual rent growth (again, being conservative)--I know this depends on the market
• Vacancy % = 1/[number of units in property]--ex. 1/6 unit, 1/8unit, etc.
• Ernest Money Deposit = ~1% of Purchase Price
• Charge an acquisition fee since I'm procuring the deal = ~1%
• Charge capital transaction fee = ~1%
• Charge Asset Management fee = 1%
• Refinance after X years and sell after Y years
• Gauge whether a deal is "good" if: Average Annual Return = 15%, IRR = 15%, Average CoC Return = 9%

Can these measures be taken for 4plexes as well? If not, what are the criterion I can remove? Should I perhaps estimate expenses at 40%? Not charge an acquisition fee? Lower my "good deal" thresholds? What I'm finding is that my offers are too low for sellers to accept, but they meet these criterion, so I'm wondering if I'm being too strict in my underwriting.

Is there an Excel model specific for 4-plexes? I couldn't find it in the FilePlace.

Hope this makes sense. Thanks in advance!