Hi all,
I am preparing for a technical interview at a firm that invests across all asset classes, so I've been running through every case study I can find. I am currently at a shop that only invests in office space, so there has been a bit of a learning curve with multifamily.
The link at the bottom is to a MF case study from Related. I'm a confused as how to model the rental income. Every practice MF model I've done starts with potential gross rent, and backs out a vacancy assumption. Where I'm confused is how to incorporate all the following assumptions:
- Acquired at 60% leased
- Leasing up 5 units/mo (5% of RSF)
- "Assume 5% vacancy in your analysis"
Do you start with potential gross rent, then do a =Max() for vacancy between the 5% and actual vacancy until you reach 95% leased?
Any insight is highly appreciated!
Keep it simple, have a dedicated section that shows the lease up on a unit by unit basis.
Beginning inventory Units leased this period Ending inventory
This allows you to incorporate their absorption rate per month. This will also be particularly valuable in multi family underwriting for ground up projects because these unit by unit schedules can help you track units under construction, completed units, occupied units, etc. Usually we just apply an average rental rate per unit to the ending inventory for that period to estimate GPR.
As far as rolling in their stabilized vacancy assumption there are a couple ways to approach this - easiest is probably to limit the above schedule to 190 units so the occupancy information is all in one area. You could also do a “rolling” NOI calculation at the trended rents/expenses then use reference formulas to pull the stabilized vacancy calculation.
Where is the company you are interviewing with out of? I have a useful sheet that shows comparable salary/bonuses if you are interested
HQ'd out of DC. This is in there San Francisco satellite office. PM me!
This case study: A 7 unit-multifamily financial statement analysis, hope that helps docsbay.net/case-study-a-7-unit-multifamily-financial-statement-analysis
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