MULTI FAMILY UNDERWRITTING

Question 1

STEP 1 of 8 - IN PLACE REVENUE

Answer 1

IN PLACE REVENUE - Rent Assumption
SOURCE : T12 (Trailing 12 month operating statement)
-Current Rent Roll
- Other Income (ie, pet rent, parking, storage)
- Vacany Rate
- Bad Debt (uncollected tenant rent)

Question 2

STEP 2 of 8 - IN PLACE EXPENSES

Answer 2

IN PLACE EXPENSES - Expense Assumption
Source : Trailing 12 month operating statement
- biggest variable PROPERTY TAXES ( which you’ll need to contact the county assessor to get/verify)

Question 3

STEP 3 of 8 - CONSTRUCTION EXPENSE

Answer 3

CONSTRUCTION EXPENSE

- cost of renovation or other physical improvement (timing will effect rent premiums)

Question 4

STEP 4 of 8 - MARKET GROWTH ASSUMPTIONS

Answer 4

MARKET RENT GROWTH ASSUMPTION

- Assumptions for market rent growth (avg. 4% per yr)

Question 5

STEP 5 of 8 - MARKET VACANCY RENT

Answer 5

• Assumption for Vacancy Rate (based on market comparables; can source from Yardi / Co-Star)

Question 6

STEP 6 of 8 - POST RENOVATION RENTS

Answer 6

• Assumption for rent increase after improvements

Question 7

STEP 7 of 8 - FINANCING TERMS

Answer 7

• Loan Amt
• Loan Term
• Amortization
• Interest Rate
• Interest Only Period

Question 8

STEP 8 of 8 - SOLVING FOR A VALUATION THAT MAKES SENSE

Answer 8

• Solving for the desired Target Return Metrics