Lesson 2.4: Analyze the Data
In most cases, you will receive an offering memorandum from a commercial real estate broker. If not, ask the seller for the following information. You can also perform a Google search on the address. You may find an old offering memorandum on the deal where you can pick up some of this information that you will need for the deal analyzer:
- The address of the property (street address, city, and state)
- The year the property was built
- The size of the land parcel
- The number of renovated units (if any)
- The number of units that will need to be renovated along with an estimated budget per unit.
- Any loans currently on the property and any prepayment penalties the seller will incur. team meet the lenders’ guidelines)
- The overall “story” of the property
The model you use will depend on the type of deal you are underwriting. A complete gut and renovation vs a value-add building are very different deals with different models. The model we will use will apply to a typical acquire, add value, drive cashflow and sell after a given time frame.