All Forum Posts by: Snehann Kapnadak

@David de Luna The difference is that the average annual return accounts for the entire lifespan of the investment. So it includes the return given to investors with the refinance and sale of the property along with the yearly CoC returns. The CoC is primarily from the rental income, reducing expenses, etc.

@Oleg Shalumov Thanks for your comment. I've used the BP calculator and it's super helpful but I also wanted to model it in Excel. Regarding expenses, would you still recommend that I conservatively estimate 50% or should it be lower? The reason why I'm asking for an estimated percentage is because I'd like to do a quick back of the napkin calculation before I get the T12 from the owner. Kind of like the 10 minute deal analysis that Michael Blank talks about. So for example on one deal, the owner got back to me and their expenses were only 25%, so of course the deal penciled out to look really good. I countered and said "usually the expenses are about 50%", but that ended up making my offer too low. I'm wondering if I'm being too conservative.

@Ben Leybovich Thanks for your note, now I'm kind of bummed that I didn't get to the top of your list for Most Idiotic Things said--I wanted to be #1 in something! I'm a big fan of you and find your story to be incredibly inspiring, so it's disappointing to see that your comment provided 0 value, but thanks for wasting your "valuable" time by replying to my question. I'll continue to do more research.

@Brandon Sturgill Thanks for the detailed response! Yup, I'm aware of the comp sales evaluation method and was using that as the primary basis of my offers, but was wondering if a case can be made for evaluating the property off of income like larger MF properties. It's good to know that GRM might come into play to some extent. Yeah my goal is to eventually scale up to larger MF properties, so I'll continue analyzing but will focus on CoC for residential with a grain of salt. Noted on working with a good agent. Thanks again for the tip!

Hi All,

Is it realistic to underwrite a 4-plex the same way as you'd underwrite a small commercial multifamily property (more than 4 units)? I've been using Michael Blank's Syndicated Deal Analyzer and was wondering if I could use it for 4 plexes as well, since I'm trying to syndicate a 4plex from family and friends (I don't have that much capital and can't provide sweat equity to partner with someone). For example, for commercial MFH I typically implement the following from his analyzer:

• Conservatively estimate expenses as 50%
• 2% annual rent growth (again, being conservative)--I know this depends on the market
• Vacancy % = 1/[number of units in property]--ex. 1/6 unit, 1/8unit, etc.
• Ernest Money Deposit = ~1% of Purchase Price
• Charge an acquisition fee since I'm procuring the deal = ~1%
• Charge capital transaction fee = ~1%
• Charge Asset Management fee = 1%
• Refinance after X years and sell after Y years
• Gauge whether a deal is "good" if: Average Annual Return = 15%, IRR = 15%, Average CoC Return = 9%

Can these measures be taken for 4plexes as well? If not, what are the criterion I can remove? Should I perhaps estimate expenses at 40%? Not charge an acquisition fee? Lower my "good deal" thresholds? What I'm finding is that my offers are too low for sellers to accept, but they meet these criterion, so I'm wondering if I'm being too strict in my underwriting.

Is there an Excel model specific for 4-plexes? I couldn't find it in the FilePlace.

Hope this makes sense. Thanks in advance!

@Kevin Hart, got it yes I can see how the different variables can make it difficult to get a quote. Thanks for your comment!

@Matt Moylan Good to know, thanks Matt. Just saw your PM as well.

@Laura Williams Thanks for the insight. Wow that's a HUGE jump. I'm currently on the hunt for a 4-plex in that market and would like to scale up from there so I'll definitely keep your comment in mind down the line. Thanks again!

Thank you everyone for your advice and tips! Very helpful.

Hi Everyone,

Hope you had a good weekend!

Is there a back-of-the-napkin calculation for insurance quotes for small (2-4) multifamily properties? I'm looking for a quick way to add to my underwriting when I receive Seller Expenses that do not account for Insurance. Should I use, say 5% of purchase price? 3%? I'm looking in Kansas City, MO, if that helps.

Any insight would be much appreciated. Thank you!

Hi Everyone,

Hope you had a good weekend!

Is there a back-of-the-napkin calculation for insurance quotes for small (2-4) multifamily properties? I'm looking for a quick way to add to my underwriting when I receive Seller Expenses that do not account for Insurance. Should I use, say 5% of purchase price? 3%? I'm looking in Kansas City, MO, if that helps.

Any insight would be much appreciated. Thank you!

Congrats Cody! Can I ask who your rep was at NBKC and what rate of financing you were able to secure? I'm doing some due diligence on them.

Hi @Kerry Baird and @Amy R., hope you both are doing well and ready for the weekend! Wanted to ask about what your experiences with Ridge Lending have been? 

• Are they transparent with the financing process?
• What are their closing costs and lending fees like?
• Is their customer service good?

Thank you in advance!

Got it. Thanks for the insight @Chris Dawson. Much appreciated!