The Multifamily Millionaire, Volume II by Brandon Turner

Author:Brandon Turner
Language: eng
Format: epub
Publisher: BiggerPockets Publishing
Published: 2021-08-15T00:00:00+00:00

Chapter Twelve

UNDERWRITING INCOME

The difference between a calculated risk and rolling the dice can be expressed in one word: homework.

— GEORGETTE MOSBACHER

Once you’ve completed the six key components of good underwriting, it’s time to underwrite a property’s income. In this chapter, you’ll learn how to verify exactly how much the property is currently earning and, more importantly, how much it could generate. While underwriting income is not particularly complicated, there are many steps involved and it can get confusing. In order to better illustrate the process, as an example, we’re going to use actual underwriting that was done for a property we will call Park Place Apartments, which was an off-market 120-unit, Class C property located in an area that was trending in the right direction.

We completed the six key components of good underwriting for Park Place Apartments, and the results were encouraging. After going through the OM, rent roll, and all other documentation, we toured the property and liked what we saw. Our property management company agreed that this could be a great opportunity. We decided to proceed with the financial underwriting and began digging into the property’s income.

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