Investigating the Apartment Building Realm

[Jack Calhoun]

Hello, my wife and I are looking into the 40+ unit apartment building arena. We have looked into a couple of handfuls of buildings and are having a harder time deciding if it is a good deal or not (we have only bought 4-plexes up to this point). Are there any of those "rules of thumb" to help give the big yay or nay? 

Thank you BP World

[James Kojo]

@Jack Calhoun There are a few "rules of thumb" but ultimately, you'll need to do a full underwriting on a property before you actually put in an offer.

I would suggest finding a good property analyzer spreadsheet and getting enough practice that you can quickly do an initial analysis within 30 mins or so.

Some things to look for in a property analyzer: 

• 
  Allow for separate entry and exit cap-rate
• Min 5 year forecast
• input for rent/expense growth on each year
• includes rehab and capex costs
• includes debt service and financing costs
• includes acquisition and disposition costs
• Provided IRR for planned exit

Honestly, there's a ton more bells and whistles you could add, but I would consider that the baseline if you're talking about deals that size.

Hope that helps!

James Kojo

[Jack Calhoun]

@JamesKojo I really appreciate it