How to Find and Analyze the best real estate deals | Multi Family investing

What's up guys? Today I am talking about the number one way to find the best deals in real estate and how to analyze those deals quickly to get them off your desk and move on to the greatest deals. Okay? And specifically we're talking about commercial real estate. We're talking about bigger apartment complexes, ideally 20, 30 plus units. And why that vehicle? Because I believe it is the number one vehicle in real estate, both in terms of passivity, in terms of lucrative, in terms of upside potential. And even if you're looking to replace your income quickly, I mean within six to nine months is pretty quick, I believe you can replace your income through apartment complexes very quickly, but it's also the most scalable in my opinion. So we're going to walk through exactly how to find the best deals. Because as much opportunity as there is in large apartment complexes, there's also some barriers to entry. And if you don't know what you're doing, the hardest part is going to be finding good deals. Okay? Now many people think the number one way to do real estate or to find these deals is going to be networking with brokers, networking with wholesalers, doing all this stuff. And while that's extremely important, it's not the best way, it's not going to bring you the best deals. The best way to find these apartment deals, the good ones, the best deals out there are going to be filling up your pipeline with off market deals. Okay? And, and so the key word here is quantity. Okay? You don't want to just try to find the one or two deals that are already out there and try to invest all and try to make it work. Right? You want to have a large pipeline full of deals. Now this key to making that work is going to be analyzing the deal quickly and getting it off your desk, getting rid of the time wasters. Okay? So in order to manage quantity and to really use quantity to your advantage, because people may fill up their pipeline and then all of a sudden there's their slam, they're not really able to to underwrite them and really go after what could be the gold in the pile. Right. So I'm going to walk you through exactly how we decipher through deals quickly within 60 seconds, maybe five minutes max. So then you can go into the next phase if it's good enough, or you can get it off your desk and move on to find the deal and not waste your time. So let's jump into that. So the key things you need, this is called the napkin analysis, okay? Back of the napkin kind of Understanding of the deal. What's needed, market rents, unit mix, expense ratio and renovations. That's all you need to be able to enter this first phase of analyzing the deal. Underwriting, right, is simply what are the potential market rents in that area? Now you can find this by going to rentometer.com it's not always accurate, but you know, there's several ways you can do it. But either way, market rents, okay, just say it's a one bedroom, one bath. 800 bucks in the market per month for that. Two bedroom, one bath, thousand, three bedroom, two baths, 1400. Okay, now next, your unit mix. How many units are in the apartment complex and how many of each type. One bedroom, one bath. There's 22 bedrooms on the bath, there's none. Three bedrooms, two baths is five. Okay, now you got that. Moving on. Expense ratio or just assume 50%. Now if you really want the deal to work, you know, you may want to assume 45%. I don't know. But max, you know, worst case scenario, you should be operating at a 50% expense ratio. And again, our purpose here is not to go into detail and waste a bunch of our time. We're just going to put a number on there and see at the end of this, if we come out within 25% of where the seller is, right. So then if we're within 25% or maybe 30%, then we can go ahead and move into a better phase and make an offer or a deeper phase and make an offer. Okay? So if you have the expenses at hand and you know exactly how much it is, go ahead and put it there. I would Even add another 5 to 10% because your information probably is wrong or it's probably not completely accurate. Renovations needed. Again, just slap something on there that you think by the pictures or if you could visit the prop, you know that's going to take more time, but you know, just use Google Maps, go in there and look at what you know, see what the seller sand renovations are needed, you know, all that kind of stuff. Okay. And then just put on there whether it's a couple thousand a door, whatever that looks like. All right, so now you got those metrics. Now you can move on to the calculation. So basically all you're going to do is your, your unit mix times your market rents times 12 is your gross potential rents. Okay, Feel free to rewind this video and really walk through it with us. Okay, so once you have your unit mix your times, your market rents you times that by 12, and that's your yearly gross Potential rent. Now once you have your gpr, you times that by your expense ratio and that's your, in a way, okay, that's your net operating income. And then of course, if you understand a commercial real estate, you know that it is valued by the net operating income divided by the cap rate and that equals your stabilized value in a way times your cap rate. If you don't know the cap rate, may just want to call a broker, call someone in the area. The best way to get your cap rate is going to be a commercial broker or commercial mortgage broker. So you know, the banks are going to be the ones that, that tell you what they're going to lend at, right? So anyway, stabilize value. Once you have your stabilized value, you times that by your discount. You want these properties at a discount. And we say 70%, you know, maybe if, if the property is really good and it's, and it's, you know, maybe, maybe doesn't have as much value add potential, you know, maybe 80%, but that's going to equal your total cost basis. Okay. And then once you have that, you're going to, minus that, minus the rental cost, right? You're going to, minus your, your rental cost. And then that'll give you the gold, your maximum allowable offer. Okay, Boom. You just did that in a few minutes, you know, five max. You just want to, it may, the first time you do it may take you 10 minutes, maybe take you 15 minutes, but you want to get that down to just a few minutes so you can decipher through quickly, right? So once you have your maximum allowable offer, then you say, okay, the seller, you know, they're at 25% and if you've been talking to the seller, it's generally off market. So you know, we generally want to go direct to seller. And so you ask them, hey, look, I'm in this range, I may can get it up if I go a little deeper. But you know, this is kind of where I'm at, right? And you see if they're not, and then you can tell them, hey, you know, I'd like to make it work, but you know, I'm just not going to be able to get much higher than that. So if I don't want to waste your time, you know, if that's not going to work, then, you know, I appreciate your, I appreciate you helping so far. So that's your maximum allowable offer. If it's within 25% of what the seller is wanting, then move on to what we call deeper dive underwriting phase. Okay. That'll be for another video, or we may have already put out a video about that, but it's kind of what we go through. Okay. I hope that makes sense. Again, this is the point. Once you filled up your pipeline, you're going to get the best deals in through quantity. Once you've filled up your pipeline, if you don't know how to do that, there's videos we put out about filling up your pipeline, about about getting more leads using strategies that we implement. And we have tons of we have a mastermind that's just constantly doing new tactics and stuff like that. But we also have videos on this YouTube channel about that. So check that out, if that helps. I hope that we can hear back from you. So look forward to seeing you all soon. Have a great day.