📊 How to Analyze Real Estate Syndication Deals Like a Pro

🧠 Why Deal Analysis Matters

You wouldn’t buy a car without checking its condition—so why would you invest $100K in a real estate syndication without inspecting the numbers?

Knowing what to look for in a deal will help you:

• Avoid overhyped projections

• Spot red flags early

• Ask smarter questions

You don’t need to underwrite the deal from scratch—you just need to verify what the sponsor presents.

🔟 Key Questions to Guide Your Analysis

1. What is the purchase price per door vs. projected exit price per door?

• If the exit price assumes a 40% increase in 3 years, ask what improvements justify that jump.

2. What is the projected rent growth?

• Is it 3–5% per year? That’s standard. Anything higher requires clear justification and comp support.

3. What cap rate is used at exit?

• A conservative underwriting will increase the cap rate by 10–20 basis points per year. A flat or lower exit cap is a red flag.

4. What is the projected Net Operating Income (NOI) at exit?

• NOI drives valuation. Compare the projected increase in NOI to rent projections and expense reductions.

5. Are expense cuts realistic?

• Total operating expenses should typically fall between 47%–52% of gross income. Anything too low is likely unrealistic.

6. Who’s managing the property and how will payroll be handled?

• For properties under 100 units, staffing may be light—ask how they’ll manage operations effectively.

7. Are taxes and insurance forecasted appropriately?

• Sponsors should assume reassessed property taxes post-sale and use real insurance quotes—not placeholders.

8. What’s the break-even occupancy?

• This shows how far occupancy can drop before the deal loses money. Lower = safer.

9. What is the hold period and projected investor return (IRR/equity multiple)?

• Verify whether returns are front-loaded, back-loaded, or evenly distributed.

10. Is the business plan clearly mapped out in the Private Placement Memorandum (PPM)?

• You should see comps, renovation plans, rent projections, and risks clearly explained.

🧠 Summary

Before you invest, focus on these three pillars:

• Price & Rent Assumptions – Are they conservative and backed by comps?

• Expense & NOI Projections – Do they align with industry norms?

• Exit Strategy – Is it realistic given the current market environment?

You don’t need to underwrite like a pro—just learn to spot-check like one.

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