Once you have educated yourself on the basics of multifamily investing, how to get started, and begin to connect with various operators, you will start getting exposure to various investment opportunities. Some of you will feel the same excitement as a kid in a candy store. Others may get overwhelmed by how to quickly sift through these various investment opportunities coming through your inbox. In today’s quick snippet, we will attempt to resolve some of that anxiety.

We will assume that you have already vetted the operator, as you are on their email list.

Most investment opportunities presented via email will contain:

  • a brief snippet describing the deal,
  • a summary of projected returns,
  • a link to the investor offering memo,
  • a link to register for the upcoming webinar (or a recording of the webinar, in the event you missed the original one), and
  • a direct link to invest.

The snippet is your first filter. It will typically have a picture of the property and will list:

  • Asset Type: B+ Class, 120-unit multifamily
  • Market: Orlando, FL
  • Hold period: 5-7 years
  • Minimum investment: $50,000
  • Funding Deadline: By 12/31/2022

This information can quickly give you an idea of whether the opportunity meets your investment criteria of market, asset type and class, hold period during which your investment is locked into, amount of capital needed to participate, and how quickly the funds will be required. If you are at a low liquidity point or will not have the funds until three months later, then that is a quick pass. Alternatively, if the asset is in a market you are not keen on, that will help you quickly move on.

The next section will typically summarize the projected returns.

  • Preferred return: 8%
  • Average cash on cash return: 9%
  • Average annual return: 20%
  • IRR: 18%
  • Equity multiple: 1.90x

This information can quickly give you an idea of whether the opportunity meets your target investment returns.

Lastly, any mention of bonus depreciation can be another quick indicator whether this particular investment opportunity aligns with your tax and overall investment strategy.

For guides on more in-depth analysis, check out our passive investor checklist and underwrite summaries.

As usual, you can always reach out to the sponsor who is sharing the investment opportunity with you to talk through it and address any questions you may have.

Should you have any questions or want to learn more about real estate investing or for an overview of our target markets, please reach out to info@dbacapitalgroup.com.

Disclaimer: The information presented does not constitute legal, accounting, tax, or individually tailored investment advice. Past results do not represent or guarantee future performance.