Growth assumptions when analyzing a deal

[David Wallace]

Hi Friends,

When analyzing a deal that you intend to hold, how do you determine your growth assumptions?

For example, how would you go about projecting rent increases during your expected holding period? How do you project any increases in operating expenses?

It seems like these assumptions would have a big impact on your expected cash flows, and therefore, the value of the property.

Any advice for modeling assumptions would be helpful.

Thanks,

[Tim Swierczek]

@David Wallace I do not calculate rent growth into my calculations.  The rental cash flow must work based on current numbers for me to buy.  If you are purchasing a large multifamily rent growth analysis is important otherwise I believe you are wasting your time and every second you are thinking about this should be spent on finding a great deal to buy.