First Look Value-Add Underwriting

[Daniel Lozowy]

What are your best tips to quickly analyze a value-add deal you get on your table? To find a max price

[Kent Ritter]

@Daniel Lozowy. Here is my advice.

1) start with the market - should you be in that market. Is their population growth, job growth, and job diversity.  Is it pro tenant or landlord? How are taxes?  Is there investment in the city?

2)look at the submarket - how are schools, crime, and proximity to highways and major employment centers

You should be able to rule out 70% of the deals just based on the factors above

3)Finally, look at the deal - is rent below the competition and by how much?  Are their examples in the market of renovated apartments getting rent premiums? These case studies are your best indicator.

You asked for a quick way.  That is it.  If you can't get a rent premium on a value-add deal then it isn't worth it.  You aren't going to make the returns you should want just by cutting expenses.