Live Multifamily Underwriting with Jonathan Twomley March 16

0:00This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate to see. According to Indeed Data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a $75 Sponsored Job Credit at Indeed.com slash podcast, Terms and Conditions Apply. Already folks, I got great news for you. If you are in my school community, we've got more value coming on March 16th, 10 a.m. Pacific. One p.m. Eastern. We are going to have the one and only Jonathan Twomly break down multi-family investing. He's going to take an asset. He's going to underwrite it. You're going to be able to ask questions. You guys know that I am eager to once again, and scoop up multi-family assets. I've currently raised about a million dollars to go shopping. You need to understand how to write deals.

1:00And I know no one better than Jonathan Twomly. And he's going to graciously give us 60 to 90 minutes on March 16th. Jonathan, thank you for saying yes. Absolutely. Happy to do it. Awesome. Why don't you just tease folks what they're going to get? Again, a lot of my folks at my Vegas event said, hey, we want to talk multi-family, Zuba, we know what you've done, but we don't know how to underwrite. We don't know how to do this. And so they want to get more details. What can we tease them with that's coming? Well, so he literally just had this idea two minutes ago. Yeah. It's the beauty of action. So what I will do is I will break down a live deal for you in person. And I have a quick and dirty underwriting tool, which I'm going to use for this. And I have a really, really detailed underwriting tool, but that's probably overkill for this. So I'm going to use my quick and dirty underwriting tool, and I'm going to give that to you if you show up on the call. Nice. And again, the beauty of doing this with real live properties, you can ask questions.

2:03I mean, remember Jonathan and I did a video. I want to say it was three years ago now where we turned $100 million asset into $48 million with like three tweaks. And lo and behold, we're seeing assets now trade at 50% or even greater discounts. So you know what you're doing. And you're going to be able to hold people's hands. It's not an expert session, right? This is going to be very kind of 101. This is how it's doing. Ask all your questions, right? Yeah, this is going to be like basic stuff to get you started, right? Just to get you thinking about it, because I could go like really deep into underwriting and probably pour the crap out of half of you and lose the other half of you. So I'm not going to do that, but I'm going to we're going to use this quick and dirty underwriting tool, which is a great sort of substitute for back of the envelope underwriting and just kind of walk you through how I think about these things. Yeah, and again, I think it's really important, because again, you have the history, you built a big portfolio, you sold a big portfolio, cast a gigantic check. You know, you're doing, you know, like I'm involved with you in a deal in a hotel,

3:04a boutique hotel, it's working really well. This, I mean, this is, this is, you're, you really do this. And I think it's going to be great to have somebody that's actually an operator and really share, really the stories, because you're going to be able to say, hey, you know, they're telling you in this listing, you know, it's X, but you should assume, you know, X minus and you're going to be able to play all of those, all those what if games, correct? Yeah, absolutely. So I'll find something, I'll find a listing and we'll just break it down. Yeah, so again, this is a, this is something my audience asked for. Again, I'm very much the one rental out of time guy, but, you know, plenty of people want to go bigger. You know, this again is something, you know, again, what it will be recorded. Again, I know not everybody can make March 16th at 10 a.m. Pacific, one o'clock east or, yeah, one o'clock eastern, but it'll be recorded for posterity sakes. So you can go back and watch it later. But this is going to be something you could theoretically use for multifamily or hotel or office, just anything commercial or is it going to be very much multifamily?

4:06Yeah, this is, this is pretty much multifamily because the hotel underwriting is a bit different. You might be able to use something like this for self storage though, because it's very similar kind of underwriting. Okay. Very cool. What is some of the, you know, what is some of the big rocks? If you, if, if we're at the end of your session, and again, folks, I will not be on it. At least I don't think I'll be on it. I have another call at that time, but Jonathan's going to run this. He's going to get me a zoom link. It'll be on the calendar inside school. Like when you're done, what are like the three things you hope people take away from it? That's a good question. Well, I mean, first of all, I think they'll get a sense of what, how you underwrite a multifamily deal in a really quick way, you know, not, like I said, this is real, sort of, back then. Look kind of things. So this would be your first cut, but it's going to be a little different from the way that you approach single-family rentals, right? So that'll be one thing. I think, you know, we'll probably wind up talking about, you know, stuff like cap rates

5:06and what that, what they mean and how they affect the value and, you know, the debt as well. Because it's really, you know, single-family is so much based on comps. It's based on like sort of competition with people who want to buy a house for themselves and they're willing to overpay and stuff like that. Like it's very different kind of thought process with multifamily. So we'll just, you know, walk through that. And, you know, I assume that folks are going to have all kinds of questions and we'll just stay around and answer your questions. Yeah. So yeah. The other thing I hope that comes with it, this is something you taught me, gosh, I want to say it was three or four years ago. You want to be a buyer when cap rates are high. Yeah. And you want to be a seller when cap rates are low. Yeah. And that's what a lot of people got asked backwards, right? They were spending up GPs and LPs when cap rates were sub four percent. It's like, where do you think this is going, guys? Yeah. This is going to end badly. Exactly. So again, buying when cap rates are high is actually a good thing, not a bad thing.

6:07Yeah, absolutely. So yeah. And again, we'll talk about vacancies, capital expenses, operating budgets. You'll just, you'll break down, you know, what it takes to, you know, evaluate a deal, right? Yeah. Just like I said, in a super quick way so that you can very quickly determine whether this is something that is worth digging into or not, you know, you can just plug in the numbers and it'll kind of tell you, like, does this make sense or not? And I think also what a lot of people probably don't realize is when you're buying a multifamily deal, it's like a, it's like a whole bunch of costs up front that you have to, you know, you have to front, you've got to add that into your equity. So it's not really just that like, hey, I've got 25%. I can buy a property for X, they're, you're probably going to need to come up with more money to cover, you know, closing costs, upfront escrow's, some upfront operating expenses, things like that. So you got to think about all those things as well when you're, when you're buying multifamily. So it's not just a simple, like, you know, 25% down, 75% LTV kind of thing, right?

7:11So that's, yeah, but we can kind of just do a session and cover all of it, you know, all of your questions about how these deals are done. I think that's a very good point. I not even thought of that again, breaking down the deal structure and what you need to get it done because you're absolutely right, the bigger multifamilies, there is a lot of cash or capital that's committed upfront that's not in that, you know, that 25% down, right? You can have three, four, five percent just an upfront fees. Right. Plus, if you're going to do rehab, you've got that cost, right? So there's, there's a little, there are a few more moving parts with multifamily that should just need to know upfront and also things like, I mean, this isn't really underwriting, but they're, you know, like a mistake I made when I first started this business was, you know, I had investors like here, you know, here's a million bucks and I was like, okay, it's great. I can buy a $4 million really, yeah. And then I went to the, you know, to the bank and they were like, do you have a $3 million net worth? And I was like, what do I need that for? I got money. See?

8:12Yeah. I got the money. I got the down payment. Like, what do I need? You know, this is non recourse, right? And they're like, well, yes, but yes, but yeah, you know, so things like that that you, that you need to be aware of when you start. Yeah. That's pretty amazing. I believe that you said yes to my crazy idea. Again, folks, March 16th, 10 a.m. Pacific one PM Eastern, Jonathan's going to break down a deal. He's going to give you opportunity to ask questions. He is the man. He has his own school community, obviously at school.com slash AIC, I will put that on the screen momentarily. Jonathan, give us your closing thoughts as we wrap this up. Yeah. Well, this was like so impromptu and kind of blindsided to me with this, but I think it would be fun. You know, I'm looking forward to helping you guys understand multi family and also just get the chance to ask questions because I'm sure a lot of you have questions that you've never really had the chance to answer anybody and we'll just take care of those two. Yeah. Yeah. Folks, again, if you don't know how this came about, we did our all rat celebration. And one of the feedback was we want to talk mostly family.

9:14And that's not really my area of expertise. So I reach out to my network, the best guy I know is Jonathan. I ask him, I blindsided. He says yes. And now you have a session with him on March 16th at 10 a.m. Pacific, Jonathan, thank you so much. Absolutely. You're welcome. All right.