Multifamily Underwriting 101

How to underwrite a multifamily property from the view point of the lender and investor. Discusses how to review location, submarket, rent comps, sale comps, and property financials to make a investment decision.
To learn more about James Eng, you can reach him at 214-300-5035 or [e-mail].
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/ @jameseng
2 Hour MasterClass with James Eng on How to Finance Your First Multifamily Property: jameseng.thinkific.com/course...
2 Hour MasterClass with James Eng on How to Passively Invest in Multifamily Syndications: jameseng.thinkific.com/course...
To see recent deals closed:
www.txmultifamily.com
Webinar on Multifamily Financing 101 (How to Finance your first multifamily property): • Multifamily Finance 10...
Webinar on Multifamily Financing 202 (Fannie Mae Loan Advanced Topics): • Multifamily Finance 20...
Webinar on Multifamily Financing 303 (How to close a loan in 60 days): • Multifamily Finance 30...

[@JamesEng]

Want more multifamily financing and investing content? Click here: linktr.ee/thejameseng (Links to all social media, courses, podcasts, and newsletter).

[@manuelp2039]

Wow James! Great video! Definitely worth watching more than once. Looking forward to more of your content!

[@JamesEng]

Thanks Manuel for watching. Let me know if there are any other multifamily topics you would like me to cover in more detail.

[@kimberlykeyton1226]

Thanks James for taking the time to put this together so concisely! I have a bunch of friends this will help tremendously as they are building their real estate portfolios.

[@JamesEng]

KimBerly thanks for watching. Let me know if you have any additional questions about a specific property or market.

[@Apaul6857]

Thanks a lot James Eng. Great work 👏 👍

[@bishoplin9201]

Thank you so much for this video James! Clearly explained and this will help a lot with my understanding of multifamily underwriting!

[@JamesEng]

Thanks for watching Bishop. Let me know if I can help with any deals!

[@maria.realtor.loanofficer]

Great in-depth content! Thank you James!

[@JamesEng]

Maria thanks for watching!

[@paultexasusa1366]

Love This Training !!! Thank You James !

[@JamesEng]

Appreciate you watching Paul and the feedback!

[@gritequity2132]

Awesome post! Keep it up, sir!

[@JamesEng]

Thanks for watching Grit Equity!

[@Planetgreenzen]

Great video, thanks for putting this together.

[@JamesEng]

Thanks for watching. This was one of the first ones!

[@Planetgreenzen]

@@JamesEng You are a natural brother

[@leenestle]

Great video, I enjoy the podcast too.

[@JamesEng]

Thanks for watching!

[@marioarcari7649]

Thanks for your content , learn so much , is there a commercial real estate modeling platform you recommend for analyzing deals.

[@WillBockovenCRE]

Excellent content

[@JamesEng]

Thanks for watching!

[@simongarfunkel9380]

Great content! Thanks for putting this together. The sheet with all the rental comps, where did that come from?

[@JamesEng]

Rental comps in this example are from Yardi Matrix. You could use ALN, Yardi, or Costar.

[@soyourrealtor]

Nice work 👏

[@JamesEng]

Thanks for watching

[@johnnyb33good21]

I love it. It's nice to watch you go into detail using spreasheets and reports. It helps get a better understanding of what's going on. I have a quick question for you. For a deal sponsor raising capital. How does one verify whether your investors are accredited or sophisticated investors? Do you just take their word or do you trust but verify by reviewing income statements and Balance sheet to see if they have the income and net worth? Thxs in advance!

[@JamesEng]

Johnny Mack, Thanks for watching. In order to verify investors are accredited, I have seen sponsors use this website: www.verifyinvestor.com/ It requires the limited partner to submit financials to a CPA or Attorney, and there is a small cost.

[@johnp999]

Thanks for the awesome video! Quick question: now when you go to that NYTimes "Mapping America: Every City, Every Block" it says you need to download Flash. But when you click the link to download Flash, Adobe says no only is it discontinued, it is dangerous. Have you found a way around this? Or a similar resource? Thanks again.

[@joaquinlopez]

Great content James! Wondering how the structure works for new developments? 🤔

[@JamesEng]

Thanks Joaquin. Development will have a 12-18 month construction period followed by lease up before stabilizing in Year 3 or 4.

[@joaquinlopez]

@@JamesEng really quick and to the point! Thank you man. How can I reach out to you for some guidance? I am a realtor/architect in Tampa, and my partners have GC license also, we have a great portfolio and we are thinking of doing our own developments, we know that none can build it faster and more efficiently than we can because we will wear all the hats saving time and money. What do we need to get in front of an investor to get our project moving? Thank you for all the knowledge! Thanks!

[@JamesEng]

@@joaquinlopez send me a email at [e-mail]

[@bobbyb1530]

This was so helpful, thank you Mr.Eng. I was curious if you would be able to share the excel sheet that you used (towards the end). It would be helpful if we could play with it as well (learning hands on). Thank you!

[@JamesEng]

Bobby, Send me a email at [e-mail] and I can send over to you.

[@moahmad6927]

Did you end up getting that spreadsheet?

[@nickcooper3152]

What are the inputs for IRR/NPV formula discount rate? Is it inflation, min. Return opportunity costs. WACC or combination of all of these? Thanks

[@joshkoperwas7527]

James. Would it be possible to get a copy of the spreadsheet you’re using to underwrite?

[@JamesEng]

Josh - send me a email at [e-mail] to get spreadsheet

[@elroyblackbean]

Great stuff here. What are T3 and T12?

[@JamesEng]

T3= trailing 3 month financials annualized. T12= trailing 12 month financials.

[@elroyblackbean]

@@JamesEng Thanks, James; appreciate the clarification. BTW, Houston says hello!

[@glendajohnson8564]

Hi James, great video I'm a commercial loan broker here in TX, would you mind sharing the excel spreadsheets, as I'm adding apartment complexes to my properties. Also I'm always seeking lenders to fund my deals as well. Thanks!

[@JamesEng]

@glenda Johnson please email me at [e-mail]

[@brians3637]

Where would you recommend finding sub market rent growth projections?

[@JamesEng]

Most investors use 2% in years 3-5 and most of the rent growth in the first 2 years is bring rents to market. There are submarket forecasts out there but typically are very expensive and don't add much value.

[@keithmode_]

13:00 mins in you said pro forma r and m? What is that?

[@JamesEng]

Proforma R&M is Year 1 Budgeted Repairs and Maintenance by new buyer.

[@bigtree441]

Where do we find this spreadsheet template?

[@JamesEng]

Please email me at [e-mail]

[@fitwithvic5300]

What is a 125 debt service ?

[@JamesEng]

NOI/Debt Service needs to be at least 1.25x. For example, if NOI is $125,000 then the maximum debt service (interest+principal payment) can only be $100,000. If you want a larger loan, the NOI needs to be higher.

[@jconner391]

Whats the difference between lending on a property and investing?

[@JamesEng]

Lenders get paid back first (lower return- just interest on loan). Investors get paid second (should be higher return if done correctly).

[@wzeng02]

Excellent content

[@JamesEng]

@Wen thanks for watching!