Read on Twitter
As a boutique REPE shop, our most precious resource (by far) is time.
The lifeblood of our business is doing good deals. To find good deals, you need to look at A LOT of bad deals.
How do I balance allocating precious time with looking at a ton of deals?
The lifeblood of our business is doing good deals. To find good deals, you need to look at A LOT of bad deals.
How do I balance allocating precious time with looking at a ton of deals?
I have developed a one minute / one hour / one day / one week underwriting process that allows me to give a cursory look to every deal that crosses my desk and then allocate more time and resources to the most compelling prospects.
1m - I answer (almost) every broker call. I spend at least 60s reviewing every deal that gets emailed to me. 90% of them get tossed into the too hard/too expensive pile. Once you have looked at 1000+ deals, the ones that are promising jump off the screen at you.
1h - for the deals with potential, I will pull up my â1h modelâ and get to work calculating a basic stabilized yield on the deal. Given our experience and knowledge of local markets, we have a good sense for what it costs to operate and rehab a building âŠ
⊠as well as what our renovated units will rent for. If I am within ~10% of my yield hurdles, I will schedule a site tour and talk to the broker about any open questions.
1d - after we get the due diligence docs, I will spend a full day underwriting all the risks and opportunities of the deal with as much information as I can get. We will do inspections and bring in vendors to price work. If everything checks out, we will submit an offer ...
⊠at a price that can meet our hurdle rates. If accepted âŠ
1w - I will spend ~ a week digging deep on all our assumptions and crafting an investment memo to send to our investors (if raising new capital).
1w - I will spend ~ a week digging deep on all our assumptions and crafting an investment memo to send to our investors (if raising new capital).
After 15+ successful deals this has been the best approach I have found to look at a broad swath of deals, while also managing our existing portfolio, our team and talking with investors.
For the last 7 years, I have been the sole underwriter for our business.
For the last 7 years, I have been the sole underwriter for our business.
My goal for 2021 is to bring on help with acquisitions, teach them our framework and expand the number of deals we look at as a company. It is the only way we can grow into the company we should be.
Delegate or die.
Delegate or die.
