Dani Lynn Robison says projected returns are too easy to manipulate, so check the sponsor's track record first, then the market fundamentals, then whether the deal survives a downturn. Only then look at the numbers.
Most people evaluate a real estate deal by the projected returns. That's the last thing I look at. Here's the problem with starting with the return: anyone can project a high number. There's no rule that says it has to be realistic. So if you lead with the return, you're leading with the number the sponsor most wants you to see. Instead, start here: who's running this deal and what's their track record? Is the market they're investing in strong? Is the structure of the deal conservative enough to to survive a bad year. And if all three of those check out, then you look at the return. In that order. Every time.
Physicians and High Earners — What Real Estate Can and Can't Do for Your Taxes
