I've done $1 billion in Comm. RE acquisitions, ask me anything

[Megan T.]

I have worked as an acquisitions analyst for the last four years at a large REIT and then a private equity multi-family shop

I have acquired over 1 billion (with a B) in real estate spread across 22 deals in 5 states 

I see a lot of questions on here about underwriting or deal analysis especially for multifamily. I have underwritten thousands of deals, so ask me anything

[Megan T.]

@Jay Hinrichs

Between 4 units, 40 units, or 400 units, the same basic principals apply for underwriting future cash flows. The differences really come about with your ability to project those cash flows. With a 400 unit property, you have historical financials, so you know the property made a certain amount this year and last year, so you can more easily project that going forward by tweaking those cash flows. You have also hopefully underwritten other deals in the area so you can better see how this property should perform compared to its comps. For smaller deals, you do not have the same access to that kind of information especially if you are a beginning investor.

With any deal underwritting correctly is about identifying the risks in a deal. There are risks in every property of every size, and you can only effectively invest if you understand those risks and how you are going to mitigate them. Where people make the biggest mistakes is by not accurately identifying risks in a deal