At this point in the cycle, when we consider a new deal, we spend a lot of time thinking about leverage. Mainly, we’re looking at how our pro forma unlevered yield (eg the cap rate we’re trying to hit post renovation) compares to the projected interest rate on the refinance we’ll do at that point.
Thought I’d share numbers for a deal we just stabilized. Not going to share the address, because I don’t want to tip anyone off re neighborhoods, etc. Anyway, here goes: Acquired in Spring 2015 Stabilized approx. 13 months later All in for ~$2.37MM Stabilized rent roll of $262k Implied GRM of 9x (!) Forecast NOI of $190k
Just finishing a 4plex in a really cool, up-and-coming neighborhood that we renovated on behalf of an outside investor. Was reviewing the original pro forma and revising in light of what I believe the rents will be… and got an annoying surprise. Based on the original pro forma, this was not a deal that we
Just had a minor epiphany while walking over to the office from breakfast that I thought I’d share with you. It’s kind of embarrassing, in a “slap-myself-in-the-head-for-not-recognizing-this-earlier” kind of way, but I’m all about honesty on this blog, so here goes… Regular readers know I spend a lot of time thinking about the components of value.
Spent some time this morning looking at rents in Silver Lake. When we started in this business back in 2008, a really nice 1 bed in Silver Lake was around $1500. Today, a similar apartment goes for $2200-2300. That’s an increase of ~50% in eight years… or around 5-5.5% / year (inclusive of compounding). But that’s