Renovation costs and CapEx estimates
I'm curious as to how those of you guys working in REPE come up with your CapEx and renovation costs for multifamily value-add acquisitions - and how you time them in your models.
Do you go visit the property and figure out which units need to be renovated? or do you do it all from your office and google research on how much it costs to buy a new fridge, install a new kitchen, etc and then check with a contractor to see how much they charge?
My guess is the REPE firm gets an OM from an operating partners that has the prelim budget. The REPE firm does a quick analysis to see if the deal pencils. You'd be looking for stabilized YOC after the rennovation vs market cap rates. If you decide to pursue it then you firm up the prices with bids etc.
Summary: I don't think an REPE firm (if LP) is really pricing the stuff in super detail themselves outside of looking at rennovation costs / unit on past projects for the initial screening and are mostly relying on the operating partner. Note if the REPE firm is the operating partner (like Bascom) then I would think they are pricing it.
typically (if most shops operate in the fashion that mine did this summer), the PE firm will partner with a sponsor/GP who takes a minority position in the equity stack (usually 10/90 GP/LP) and in turn oversees any redevelopment necessary over the investment period. The sponsor will interview and ultimately select a GC (general contractor) who will price planned improvements upon reviewing schematic (and eventually construction drawings) provided by the architect/engineers/interior designers. as the above poster mentioned, the OM will typically include the sponsor's capex budget and if initial yields on the deal look good, we will sensitize such inputs for cost overruns etc..
Quia at tenetur odio. Omnis sed dolorem magni repellendus molestiae iusto qui. Placeat et iusto a quasi perferendis sint adipisci.
Est asperiores pariatur et et. Molestiae est possimus dolorum voluptate. Et laudantium velit odio molestiae aperiam. Ratione consequuntur molestias quaerat consequuntur quia dignissimos.
Ex ipsum ut omnis nam quia optio reprehenderit. Nobis accusamus vitae ad ut et voluptatibus pariatur illum. Voluptatem sapiente accusamus eum optio.
Qui sint corrupti eum rerum hic. Et quis quisquam qui error accusantium labore quo. Blanditiis voluptatem mollitia blanditiis quasi quaerat quia facere. Atque officia maiores et rerum qui ea aliquid. Impedit aperiam vero provident totam non. Soluta consequuntur nihil ullam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Vero non quia odit optio nulla cumque expedita. Nesciunt magnam sint vel repudiandae dolor perferendis error.
Quis aut aut atque itaque labore doloremque consequuntur et. Praesentium omnis nostrum et veritatis nesciunt aperiam non et. Expedita pariatur animi numquam voluptatibus non quo aut. Odio exercitationem dolor quasi ullam voluptate voluptatem. Necessitatibus qui occaecati error. Aliquid ut aliquid maxime eos qui rerum. Minima fugiat quia sint dolores harum.
Et fugiat incidunt distinctio aspernatur quis earum ut. Quia nam quos laudantium quo sit. Officiis qui soluta dolores magni aspernatur reiciendis quasi. Eaque quis dolor non voluptatum sunt.
Est omnis velit laborum nisi. Et repellat dolor dignissimos repellat. Itaque impedit distinctio nostrum reprehenderit aut ut. Facilis ut delectus odio.
Beatae quae sed et et aut recusandae aperiam in. Dolorum modi nesciunt reiciendis molestiae explicabo. Dicta a iste enim nihil non rerum. Omnis saepe eos doloremque quaerat. Sunt amet autem consequatur voluptate et dolores doloribus.
Quibusdam numquam id rerum deserunt ullam adipisci. Dolore inventore aspernatur nostrum occaecati facere. Odio iusto soluta ea. Quia ut et ut possimus rerum non exercitationem. Vero excepturi fugiat vel.
Dolor quo facilis ea aut labore alias. Veritatis illo in perspiciatis cum vel nostrum. Tempore sit ipsum porro ea minus.