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Multifamily Legacy Podcast

Feb 19, 2019

Today, I’m going to share some stories about what I did wrong to prevent you from making the same mistakes. Pillar 3 - Secret to Analyzing Phat Deals is often the point where most new investors fail.

They make bad assumptions and become too aggressive. They over promise themselves and their investors. That’s a recipe for failure, not success. It can get you into a lot of trouble. I know because I have failed time and time again, but I try to not make the same mistakes.

Topics on Today’s Episode:

  • Pitfalls of broker packets with an offer memorandum (OM); peel back layers to find accurate information to analyze a deal and make assumptions
  • Select software (Kahuna Cashflow Calculator) to underwrite and analyze deals
  • Most people speed and drive numbers too fast; they overestimate what they can do - be conservative and learn to say, “No”
  • Data and due diligence identify if it’s a deal or not, don’t buy based on emotions; utilize Do Not Exceed bids
  • Rules of Thumb to Underwrite Properties on Per-door Basis:
    • Raised salaries by $1,285; invest in your people
    • Increased online advertising and promotion by $200
    • Budgeted $800-900 for upkeep and maintenance
    • Office admin bumped up $150
    • Get an insurance agent to give you a quote
    • Verify utilities by obtaining costs for the past three months
    • Underwrite cost of taxes going up due to new purchase price
    • CapEx: Determine reserves and make adjustments
    • Underwrite with 25% down; amortize at 25 years, not 30
    • Never underwrite property with higher than 94% occupancy
    • Always underwrite concessions at 3%
  • Ultimate Underwiring Goal: Under promise, over deliver


Links and Resources Mentioned:


“They over promise to the people that matter most - that’s your investor, that’s the money. When you do that, it’s a recipe for failure.” Corey Peterson

“Your experience is the sum of two things: All your successes and, I think more importantly, all your failures.” Corey Peterson

“If you look at underwriting and analyzing deals from the right perspective, it will give you a key to be super successful.” Corey Peterson

“When we really, really want something, we try to make it work.” Corey Peterson

Don’t forget to download my Free Workshop Quickstart Video Series, and if you like what you have heard please leave a review on iTunes.

Text the word MONEY to 408-500-1127 to get my free private money program and credibility kit for single family.