What is needed for a good deal?


Come with me on an analysis of a multifamily property for a possible purchase.

We will walk through a four-point checklist, kind of up at 30,000 feet, if you know what I mean.

Here is how we at Attune Investments tend to think about a property being a good deal or not.

There are four elements to this checklist – (1) buy right, (2) finance right, (3) reposition right, and (4) manage right.  Here goes.


You may think “buy right” is about buying the property at the right price.  And, it is.  But the price is only one small part of buying right.

Buying right starts with your understanding of the market.

For our purposes, not just any apartment complex will be the right property.  It has to be in an area that has the right population.  To be more specific, who is our apartment complex going to serve. 

One way of looking at this is by thinking of a problem and a solution.  Is there a problem that our apartment complex will meet?

Let’s say we are looking in Volusia County, Florida.  Not one of the large markets like Miami, Orlando, Jacksonville.   

Is there demand for apartments in Volusia County?  Will that demand be there next year and the year after that?  If we purchase the property, will we be able to rent the apartments?

It is the right market, with population and job growth, with a path of progress, good schools, low crime, etc. 

If we think this is the right market, we will take a look at the other apartment complexes similar to this one.  What are their rents?  What kind of amenities do they have? 

Determining what the right price for a particular property is can be a challenge.

The “right price” is a somewhat subjective decision.  Different people might decide on different prices that seem right to them.  We will have to run some numbers related to each of the four elements.

As the buyer, we have to determine why we want this particular property.  Is there something we know or think about the property that would lead us to be willing to pay a certain price?  We might consider what other properties are selling for, or whether the local market is growing well, or whether the government is investor-friendly.

What is our system for determining what the right price is for a property?

Although I have put “buy right” as the first check box, I will wait to settle in on the right price until I have worked though through all four elements of this checklist.  I put it as the first point in the checklist because folks like us usually think of a potential purchase price first.

But, ultimately my purchase price will have something to do with my exit strategy and the cost of money and whether I will be doing any capital improvements or implementing any management systems that will have an effect on the value after I purchase it.

And remember, buying right includes not only the price but the terms of the purchase.  If I can get seller financing or the right financing, I can pay more up front, perhaps.

So, let’s look at these other elements and come back to buy right later.


Our second element is “finance right”.  We will seek the right leverage at the right terms for the particular property and concept.  We will look at institutional financing and money from private partners and our own funds in this finance right element.

We note that all four of these elements must come together.  Once we find a particular potential property, we will still need to project what the renovation costs will be to know how much it will cost to both purchase the property and renovate it.  Some properties will cost too much to renovate, our next element.

Assuming we can buy at the right price of purchase and renovation, how will we finance it?

So, what is available for financing?

We might have enough available cash of our own to do everything, and self-finance.

We like to use the bulk of our funds from banks or traditional lenders or private partners. 

So, what might be available with a bank-type lender? 

We would need to syndicate or form a group of private lenders in accordance with Security and Exchange Commission rules. 

Our investors would prefer we have some of our money at risk along with their money, so we will decide how much we want to personally invest in this property.

But, we still need to get through the next element to see if these numbers work.  The repositioning costs are critical to the viability of any proposed purchase

All four elements need to be right.


So, we looked at two elements that are related to this third element.

We looked first at “buy right”.  We are making sure we are in the right market, solving a real problem with an appropriate solution.  We are considering available properties which might be available at the right purchase price with the right terms for the purchase. 

Then we looked at “finance right” and realized our financing might come from two sources, a bank and some private partners.  We would negotiate terms such as interest rates and length of financing.  And both of these needed to take into consideration this third element “reposition right”.

What might be some factors in doing the repositioning right?  What improvements or renovations are we considering?  When might we plan to do these – all at once or over time?

Will this conversion work?  We still don’t know yet.

As with the first two elements, this third element relies on the fourth element, managing right, as we will see in a moment.


The final aspect of “manage right” actually depends on why we want to do this purchase.  We will explore our purpose.  Are we in this for the cash flow or for the appreciation or both?

A part of “manage right” for us is having a good idea early in the process of what we expect the rents to be for the apartments.  What will be our plan for moving from current rents to the increased rents?

We want to know if the property will cash flow once it is operating well.  We will work out some “pro-forma” numbers to see what will work.

We will also need to think about how we will manage the complex once it is up and running.  Will we hire a third party property management company or manage ourselves?

We might secure an after-completion appraisal from a professional to see if we have made the right assumptions.  This will help us see if our numbers work.  Does another expert think we will create appreciation with our plan? 

We will also want to consider what our exit strategy will be.  Are we planning on holding this new apartment complex for a long period of time, for five to seven years, or will we be “flipping” it once we get it stabilized?

Managing an apartment complex has a lot of moving parts. 

Only when all four of the elements are making sense, particularly economic sense, will we know what will work. 

We will know what we can offer to buy right, how we can structure to finance right, what the standards will be to reposition right, and how we will manage right through construction and into the property stabilizing and running well.

What do you think your decision would be?


When you are considering getting into a deal on a property, whether as an operator or as a passive investor, take a look at these four elements.

If you buy right, finance right, reposition right, and manage right you have a deal.


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