Investor · Carnegie, PA · Member since 2014 · 259 posts · 144 votes
We've come across a few package deals lately and are having some trouble making sense of them and organizing the results when evaluating. Often times the different properties have different numbers available (with varying degrees of accuracy), and so far we have just been evaluating these as individual properties and the summarizing the results. Wondering if there is a better way of doing this...
1. What are the steps you take to evaluate a package deal (Ex 2 duplexes, a SF, 3 triplexes, and a 10 unit)? and is it any different from a large multi-unit deal of say 24 Units?
2. What tools/methods/calculators are there to make this more efficient? So far, we just run each one through the calculator, make a decision on each, and summarize.
3. Then proceed to come up with an offer for the full package or the highest performing properties in the package.
Rental Property Investor · Algonquin, IL · Member since 2019 · 55 posts · 63 votes
4y
Hey @Matt Faix! I know this is a super old post but I'm wondering what you ended up doing?
I've got a package of 3 SFRs that I'm trying to evaluate right now. I use DealCheck for most of my analysis but I'm struggling to figure out exactly how to evaluate the overall package..
Investor · Carnegie, PA · Member since 2014 · 259 posts · 144 votes
4y
We ended up not doing that deal, and we're in the self storage world now, but looking back I'd actually evaluate it both ways (as a package and individually), then make your offer based on what makes you the most for your exit strategy - flips, BRRRRR, etc
You’re buying it as a package so you want the income and expenses to work out and generate a good profit as a whole. In this case combine all income, all expenses, all crowd and see if it works.
However, you likely won't sell or operate it as a package. You'll operate them individually or sell different assets at different times so they have to be able to stand on their own. You may not want to buy a 5 unit building, 2 houses, and a duplex if the income from the 5 unit is needed to cover the costs of some of the other properties. If one of your strategies is to BRRRR them, then maybe this isn't an issue because you'll increase the revenue. Either way, I'd still evaluate them individually so you know which ones are going to generate the most income, and which ones are going to have higher costs.
We ended up combining a few different spreadsheets and calculators over the years, and that’s been our base for a lot of properties. Establish your buying criteria (cash on cash, cashflow, cap rate, etc), then find or build a calculator that measures those in a way that works for you.
Rental Property Investor · Algonquin, IL · Member since 2019 · 55 posts · 63 votes
4y
@Matt Faix
Thanks Matt! We actually spent yesterday morning creating a spreadsheet to do just that. We have one we use to evaluate a single deal so we just adjusted it to analyze three deals on the same page and then also the overall package deal. Planning to start negotiations today so we will see what happens! Thanks!