What is median income
What is the market cap rate
What is the per square foot market rent
What is the market rent for each unit mix
Are the tenant laws favorable to tenants or landlords
Check crime reports
Per unit expenses in the market for this type of deal
What other factors do you like or dislike about the market
Population in the market
Unemployment
Median income for the market
Population growth
Employers in the market
Job growth
Rent growth
Occupancy level over past 3-5 years
Average effective rent
Absorption rate of new construction
What is the cost of renting versus owning
Metrics to Focus On: What Is →
4 Step Deal Underwriting
Analysis Market Questions
Market Questions
Why are the owners selling
How did you find the deal? Is it listed
How long has the owner owned the property
How much did they purchase it for
What is the seller doing with the proceeds from the sale
Does the seller own other assets
When were the roofs last replaced
What is the condition of the appliances
How old are the mechanicals
Are the roofs pitched or flat
What is the proximity to jobs
List five market rent comps
When was property built
How many buildings does it comprise
What are the amenities on the property
What class is the property
What class is the area
4 Step Deal Underwriting
Analysis Market Questions
Owner Questions
property questions
What is the tenant make up (jobs, incomes)?
Are they white or blue collar workers
What amenities can you include to increase the value/add
rent to the property
property questions
4 Step Deal Underwriting
Analysis Market Questions
What cap rate are you purchasing the property at
What is the per unit cost of the deal
What is the unit mix
What is the size of each unit mix (sq foot)
What are the expenses per unit of the property
Have there been concessions on the property to lease out
What are current rents
Are any of the units LURA or section 8? How many
What are rents per square foot
What is the insurance quote
What is the physical and economic occupancy
Is there a laundry or cable contract in place
If you are going to reposition, how much do you budget
to spend per unit
What is the updated mill rate? What is the amount for
the new updated property taxes
Is the debt assumable? If so, what are the terms and
what is the loan amount
4 Step Deal Underwriting
Analysis Market Questions
Financial Underwriting Questions
How much is the asking price
What is your strike price
What is most you can pay to hit target returns
What is your exit cap rate
What is the loss to lease
Break down each item line of revenue
Laundry
Fees
Cable
Application
Storage
Vending
RUBS
Pet
Move in fees or Security Deposits
Short term rental fees
What interest rate and LTV are you underwriting
5 year projection: How much rent increase are you
planning for year 1-5? What lead you to that decision?
What kind of expense increase go along with that?
How much are you estimating for repairs
How much do you need to put in capex
What is projected cash on cash return day one
What is the 5 year Average Annual Return?
What is the year 1 cash on cash return?