Shortcuts to Analyze Value-Add Apartment Deals?

[John Casmon]

I've seen plenty of shortcuts to analyze apartment deals, but not quite for value-add strategies. 

It takes me at least an hour to properly analyze a value-add apartment deal, and I'm curious if others have come up with shortcuts to determine if a deal really warrants the full analysis. Is there a way to quickly tell if a deal warrants that hour long investment? Is there a key metric that you look at to determine if a deal is worth more of your time?  

[Ben Leybovich]

I think you are right. It takes time.

Now, there are disqualifiers, of course, which cause you to trash the opportunity in 5 seconds. Such as wrong location, mechanical set-up, vintage, unit mix, etc. However, if you don't trash it right away, what you're left with are 4 aspects of value add that have to synergize:

1. Price

2. Debt

3. Lift

4. Budget

Price is beside the point. The debt is a function of in-place numbers, which you need to break down and organize such as a lender would. Lift is a function of the market and the asset, which takes a minute to figure out. And, budget is a function of the business plan, which you won't know until you know 2 and 3.

So, if you can do it in an hour, good for you. Takes me longer.