Master Deal Analysis in 10 Minutes a Day to Buy Your First Multifamily Property

Hello and welcome back to Multif Family Strategy. I'm Christian, your channel host. Today, we're going to be talking about, I think, one of the most important things. What is the one thing, the one skill that you can build that will help you buy more deals. Now, this goes beyond creative finance. In fact, this is before any of the money even could be raised. I'm going to show you a simple skill that you can work on today to buy more deals. If there was only one thing to work on, this would be it. It's the analysis. It's actually underwriting deals, and you can do a simple drill daily. This is going to be way easier than working out every day. I'm talking five, maybe 10 minutes while you're figuring it out of actual practice getting to know the deals in your market and getting really sharp. Here's what I found. Before you can do creative finance, before you can raise any capital, before any of the money even comes into play, no one writes an offer if they don't know a deal's a deal. It's not the sexy part. It's the blocking and tackling of real estate. This is the core skill. If you are good at quickly underwriting deals, you can identify opportunities. If you can identify the opportunity, you can put deals under contract. If a deal's under contract, you can start figuring out the money piece. You're never limited by money. You are always limited by your ability to put together the opportunity. And the opportunity is everything. So, what I'm going to do on today's video, I'm going to actually dive into a calculator that I use to rapidly analyze any deal. I'm actually going to share my screen. I'm going to run through it. I'm going to show you how to do it on the intro math and on the exit math. The inputs, how you find the inputs so that you don't get stuck. If you do this correct, this is 5 to 10 minutes a day of work underwriting the deals that are on market, available in your market right now. This drill is so simple, anyone can do it. And most of you will not do it. You'll be the same people who don't buy deals. But if you really do want to buy deals right now, and you do not have, and you have not yet put together the portfolio that you want to have to build your personal financial freedom, whatever that looks like for you, this is the skill you need to learn. So, join me on Zoom downstairs. I'll see you in a second. Oh no, it's a screen share and calculators and numbers. Stick with me. This is the important part. I'm going to make it so stupidly simple. But if you've already watched the first part of this video, don't bail on me now. This is the valuable part. By the way, this exact calculator is available in our school community. There's a link below. S K O L. It's $1 to join the community. Uh not because I want to charge $1, because if it's completely free, a bunch of scammers join the community and try to sell you stuff. Uh but to keep an amazing community, it's a dollar. This calculators here. There's a ton of videos to get you started and a booming community of people doing exactly what you want to do. So, check that out. The link is there below if you want to use this exact same calculator. Let's use a hypothetical deal. Million-doll deal. It's 10 units. It's on market right now. I'm going to show you how to fill this out as simply as possible. If you do this drill consistently, you will buy more real estate. And it's easier than you think. Let me run through it. Purchase price. We're going to put in exactly what they're asking. We can adjust this via the guess and check method. But right now, let's just go conventional debt. No creativity. What does the deal look like where they're asking? Million dollars. 25% down is about average. I'm going to go a 25-year AM as a lot of debt products are there. We might be able to find 30, but we choose our amization or debt product. So, the basic purchase picture, million dollar, 250 down. I'm going to call this uh 3% closing cost. No renovation budget on this particular deal. It's already beautiful and optimized as far as the condition of the building. So, we'll just say for this building, $30,000 to close it, $25,000 down. That's a bank loan of $750. Average interest rates today are around 6.5%. You can obviously adjust this to what the market is doing when you're watching this video. 25-year amortization, average market cap rate. Don't get stuck on this. If you don't know the cap rate for your area, which is how buildings are valued, go to chatbt or claude or Google or wherever and just type in the address and say, "What is the average multif family cap rate for this building?" If you want to be a little bit more accurate, rate the building as class A, B, or C, and say, "What's the average cap rate for this class B building at this address in this market?" Use that number to do your basic underwriting. You'll get better as you go. practice simply. Same thing with taxes and insurance. You're looking for where it's going to assess after you purchase. So, your question for your AI or your Google. I'm buying this property for a million dollars at this address. What do we expect taxes to assess at? There is an algorithm that different counties use to factor for their tax. The internet knows what it is. This will be fairly accurate. Use it. Do not spend all of your time trying to guess what taxes will be. Use what the computer says for your initial underwrite. Same for insurance. If you don't know the average insurance rate, many markets, it's like a,000 per unit per year. I'm just going to put in here $12,000 a year, a little over that. Again, different markets, different cost. Google it. Move through this piece very quickly. Now, we get into our actual expenses. Management, it's usually around 8%. I think that's a good number. In most markets all around the country, it'll be 8% of income. Maintenance and repair. This is a 10-unit hypothetical building. You have a minimum of $100 per door per month on an average building. Use that number. you will dial it in as you actually do a physical inspection for your initial look. I've managed thousands of rentals. I own about $850 today. I have a lot of data that says in today's market and over the last few years on average $100 per door per month is a really good average maintenance cost. That includes some improvements, a little bit of capex, and general maintenance. Landscaping, we're going to say $250 for this. We'll just say there's a small little lawn and we do a little bit of mowing once a month, twice a month. Monthly maintenance utilities. For this deal, I'm going to say that we're billing back utilities for most of the tenants. There are some common areas where we pay the electric. We'll say there's a laundry room on site. Now, on the day one income, we're going to say for our hypothetical deal, it's about $9,000. And looking at this, because I've done this many times, I don't think this is going to cash flow here, but let's see. We go to the analysis tab. We're a little negative. About $1,000 a month negative. So, the deal as it's listed online right now, not a great deal. What do we actually need to see? Positive income and a debt service coverage ratio of a 1.25 or higher. We don't have that. So, we go back and we do guess and check. I'm going to say, let's say if we bought this for like $750,000, what would this actually look like? Change nothing else. We're slightly positive. Now, am I just super excited to buy a 10plex that makes $300 a month? Does that change my universe? No. And a lot of people will stop right here. Is the debt service coverage ratio high enough? No, it is not. A bank is unlikely to lend on this, but we're a lot closer. We got the cash flow positive. The next thing we're going to look at is the upside of the deal. What I think I want to do here is change the amortization. Let's see if we go from 25 to 30 years. How close we get. 1.15 DSCR. We probably need to be closer at this income level to 700,000 on a 30-year debt product. Let's see how that looks. 1.23. We're right here. This is the threshold of a closable deal. We could get a bank on board with this, but just barely. Now, am I excited about $750 a month of income? Not particularly. That's not amazing on a 10plex. But there's one more thing to consider. What's the upside? We have a minimum closable scenario. is the most we can offer with the debt product that we have for this deal. It's not super sexy. Day one, it's barely closable. Let's say rents for this market are,250 per month. We go to max income. That's $12,500 a month. Did our price go up because our income went up? No. We bought it for the price we bought it at. Does our debt go up? No. We bought on fixedear debt. Change this to the 30-year am that we did. The market cap rate, does the market change because our deal is doing better? No, it does not. Taxes, insurance, maybe they'll go up a little bit. I added $1,000 to property tax. Maybe they went up over the the the couple years it took to get us to our market rents. Management, we'll go ahead and keep this at 8%. Maintenance and repair still a,000. Landscaping 250. Vacancies factored in. And that number went up because we are making more. So, it cost us, we discount a little bit more off because we're missing out on a little bit more rent for vacancy. Utility expenses, we'll call them the same. X analysis. Well, now we're cash flowing $35,000 a month. Little more than that. A 21 almost 22% return on investment coming back every year. This means in less than 5 years, all of our original cash just flows back to us. Our debt service ratio is a 2.2. We could actually likely we put in $200,000. Conservatively, we can probably pull out $380,000 of tax-free money from this deal. Is this the sexiest deal I've ever seen? Absolutely not day one. But if we get it closable and we have a clear path to this, this is a deal that I would close on. I know that if I'm buying conventionally with no creative finance, $700,000 is my price for this deal. That's all you have to do. I did this in a few minutes while explaining it slowly. You can do this way faster in real life if you do this drill once a day. This will take you way less time than working out. So, if you think of how hard it is to go to the gym, think unbelievably easier. Do a little bit of financial bodybuilding every day. Do this once a day on a deal that is listed. You will become incredibly sharp in your market very, very quickly. You'll begin to know when a deal's a deal. When you're confident that you have a deal, you'll start writing offers. when you start writing offers, you start closing real estate, you get the point. And that's it. That's what you need to know. That's how you need to put these deals together. This is where the opportunities actually are. It's in the numbers. Figure out how to make a deal work. And we're talking simple stuff. We're talking guess and check. We're talking fill in the blank on a calculator. What you're going to find is you're going to get used to market rent. You're going to get used to what taxes cost. You're going to get used to what insurance cost. As you underwrite more deals, you'll be able to see them online and instantly go, "Wait a second. I think this is interesting." Then you do that napkin math in your head. Then you plug it in the calculator. This is what you need to do to start building the muscles to write offers, to raise capital, to get creative. You need to be able to create your base case if you want to do any of that. This is the skill to build if you want to grow your portfolio. If you want to get in a community that's doing exactly this for a dollar a month, it's the school community. It's below. Check it out. Link is below. The calculator is there as well as a ton of other resources that you can use. We'll see you there. Thanks for watching. Like, subscribe, and I'll see you on the next