Our guest is the author of the fantastic real estate investing book “The Definitive Guide to Underwriting MultiFamily Acquisitions” and we take a deep dive into the art of underwriting!
Robert oversees acquisitions and capital markets for Lone Star Capital and has acquired over $100M of multifamily real estate. He has evaluated thousands of opportunities using proprietary underwriting models and published the number one book on multifamily underwriting, The Definitive Guide to Underwriting Multifamily Acquisitions.
He has written over 50 articles about underwriting, deal structures, and capital markets and hosts the Capital Spotlight podcast, which is focused on interviewing institutional investors.
If you’re someone who wants to learn more about underwriting multifamily deals then this episode is for you. We dive into how to get started, vetting deals and making sure you’ve got the knowledge to succeed. Join our community and improve your investing knowledge completely free.
- To get started you should research and become familiar with income statements and rent rolls.
- Take the above information and plug it into a model that will provide you with vital financial data.
- Underwriting is the financial aspect of evaluating an opportunity. It will also allow you to determine your return hurdles and risks.
- A key contributor to risk is debt. The more debt, the more risk, and we also want to look at the maturity of the debt. For example, bridge loans are more risky vs permanent financing.
- Look at business plans and ask: How much are we changing the revenue? We can demand a higher return for more potential risk.
- The number one way people lose out in real estate is because they can’t afford to cover the debt service.
- The main assumptions that you want to get right are the pro forma rents, rent comps, rent growth and exit cap rate.
Start With Why – Simon Sinek