Knowledge is Power: Why We Passed on this Deal #2

In this video, I analyze a multifamily deal that precludes a deeper analysis and discusses the reasons why we decided not to move forward with it. If one has established criteria or a 'buy box,' which is a set of specific investment parameters, it can save them needless hours in an Excel spreadsheet trying to work numbers on a deal that ultimately doesn't meet their needs. This 'buy box' is part of our criteria test, and ensures we only bring out the best investment opportunities.
I highlight the deal's positive aspects, such as a strong cap rate (though not as high as needed) and a great unit mix. However, I also delve into why certain factors, like the purchase price and the need for significant CapEx, made it less attractive. I underscore the importance of considering risk and reward when investing in different property classes.
As mentioned in the first video of this series, once it passes the criteria test, I financially model it, and then pass all financials and market statistics onto my lead analyst, who brings 30 years of commercial financial modeling experience to the table. It never got that far, because it didn’t pass a few fundamental rules of thumb. At least our rules of thumb.