Investing in multifamily real estate is a numbers game in many ways, so being good at math will stand you in good stead. Today’s guest is Matt Owens, here to talk about how he handles his due diligence as well as some of his secrets for managing and operating properties. With a background as a CPA, Matt knows how to analyze the financials of his prospective properties so he can get better deals and put them to the best use. Matt gets into some of the main things he looks at before going ahead with a deal, mentioning how he arrives at his purchase price after doing a few calculations on an initial figure defined by the market rents for that area. We talk to Matt about how deep he goes into his underwriting when he prefers ‘back of the napkin’ versus full spreadsheet approaches, and how helpful his team is for sifting through deals to find the best ones. From there, we chat with Matt about why he likes value-add strategies for raising rents, his definition of deal-breaking details during underwriting, and what he learned about efficient management from owning a management company himself. Wrapping up, Matt drills down on why the financial side of operation is his superpower, and he talks about how important it is to have a solid understanding of the numbers behind a deal as far as helping it to perform optimally.
Key Points From This Episode:
- How Matt’s background as a CPA aids him in real estate, and the different niches he works in.
- Two things Matt looks at as far as due diligence: Market rents, and the area he buys in.
- How Matt switches between ‘back of the napkin’ and full spreadsheet approaches to underwriting.
- The value of having a good team to underwrite many properties well and find the best deal.
- Different analysis strategies depending on the asset and why Matt focuses on value-add strategies.
- The need to value-add on under rented properties before raising the rents and finding investors.
- Underwriting deal breakers: Tenants thrown in with a deal, faults kept secret, and more.
- Lessons Matt learned about efficient management through owning a management company.
- Separating cap-ex from repairs, using a management company, and watching the numbers.
- Matt’s asset management superpower: Analyzing the financials to structure the best use of his equity and properties.
- How Matt uses seller-finance strategies for smaller assets with lower balance loans.
Tweetables:
“It’s a lot of fun, a lot better than doing taxes and auditing for a CPA firm but you know, the skillset there plays perfectly into real estate investing in multifamily because it’s all math, of course.” — @OCGProperties [0:01:33]
“The first thing that I look at when I am analyzing a new deal is what are market rents at.” — @OCGProperties [0:02:10]
“You’re always looking at what is my highest, best use of my equity, what is the highest, best use of that property at the time.” — @OCGProperties [0:13:37]
Links Mentioned in Today’s Episode: