Hey BP community! My name is Haneesh and this is my first post, but have been following the forums for a few years now. I recently got my real estate license and joined a brokerage. Some of my friends and mentors have...

@Ben Leybovich  the biggest issue I see using cap rate for SFR is most rental SFR's are sold with no history of performance so its all blue sky any way.. just like pro forma's on multi that are all based on best case scenarios to derive at a cap rate. a combination of actual sales comps and GRM is probably more appropriate in the SFR space..

On top of that, the pro forma financials had ignored vacancy rates and only had $2,500/year budgeted for maintenance. 

How to you form a buyers list?

I have looked at several of the pro formas here on the site as well as others, but am struggling to analyze a second loan for a PML from these spreadsheets.

If we find ourselves partnering with a company where we intend to split the profits and come in with a % each on the investment capital, then we'll form a separate LLC.

In your startup, you'd be best off showing investors your valuation methods, along with all your operational assumptions, financial pro forma income statements, etc., ... all the stuff you would typically see in a well developed business plan or an S-1 or S-11 registration statement, even if you don't register.

Make sure you factor in some vacancy, maybe 5% or whatever your market dictates.Also, you should factor in a management fee even if you plan to manage the property yourself.Finally, make sure you factor in some dollar amount for repairs and reserves (as a broker I put $500/door in the pro forma but you may want to use a number higher than that.

We plan to form a corporation once our options for conventional financing dry up and we'll move the titles over to those when the time is right.

I would add that Ben Frederick uses very optimistic numbers in his pro formas.