When I look at properties in any market I analyze at least five similar deals to the ones I’m interested in purchasing. And to accurately assess potential problems and opportunities. Without line item expenses it’s almost impossible to knowledgeably analyze a deal. Trash (sometimes included in utilities).Expenses can be left out.įor example the simple category “Utilities” will include: Without itemized line items you can miss red flags. The problem with broadly categorized property expenses is that you cannot drill down to specific costs. Before I agree to a showing and before I consider making an offer on an apartment building or any multifamily property. When I analyze deals I ask to see these numbers up front. Your bank or lender will want to see historical cash flow figures for the property going back at least one year, preferably two.
Until you get your hands on the seller’s historical property operating numbers it’s almost impossible to get an exact understanding of the property.Īnd it’s your job to get this information. Expenses as listed in an apartment building offering memorandum (brochure)Īpartment building offering memorandums (sales listing brochures) typically list property operating expenses in general, broad categories almost always like this:Īs I said, fairly broad categories. Today we’re going to talk about expenses. Comprehensive capital expenditure projections.Detailed property operating income and expenses.This question is almost impossible to accurately answer without: It’s the most often asked question I receive: How do I know if a deal is a good one or not?
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