Self-serve instrument
The seller's number is the last thing you should look at.
Every broker package is built to make their asking price your starting point. This is the method we use to arrive at our own number first, written down, with the assumptions included so you can argue with them.
That is the whole result. Nothing was booked, nobody was notified, and no one is going to chase you about it.
If you want a hand with any of it, I am at [email protected]. Or call the AI line at (605) 600-8164 and ask it whatever you want.
What is in it
- The assumption table. Seven asset classes, and for each one the operating expense band we work from, the default we use when we do not know any better, two cap rates, and a vacancy figure.
- The five steps. Rent to gross, gross to effective, effective to net operating income, income to a price, price to an offer. Arithmetic you can check by hand.
- When to move off the defaults. Which questions change which number, and by roughly how much.
- A fully worked deal. A 24 unit building, priced end to end, then priced again after one assumption changes. The same deal goes from 14 percent over asking to 3 percent over on one question you can ask in thirty seconds.
- What it does not do. No comps, no debt, no capital expenditure. Stated plainly, because a tool that hides its limits is worse than no tool.
Ballpark assumptions, not comparable sales. This is not investment advice.
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