Speaker 1: Hi, this is Michael Blank. When I first got started with apartment investing, it took me quite a bit of time to analyze a deal and figure out if it's a deal, and if not, what would I pay for it? When you're looking at a lot of deals, it's too much of time, and the other thing is you need to be able to respond back to the broker, or wherever you got the deal from, saying, hey, this deal won't work for me, but this would, and here's why. So if you don't do that, then you're not responding to the broker, and eventually it'll stop feeding you deals. So you've got to be responsive, but it takes time. So I've been working on a spreadsheet, an analyzer, that does these things quickly. What I wanted is I wanted it to do the easy things quickly. So when you first get a deal in, I don't want to spend more than three, four minutes to provide meaningful feedback to the broker, saying, this deal won't work for me, but here's what would, and here's why. And as you go down the path towards more negotiating, even under contract and due diligence, I do want to be able to do more advanced things also, but I don't want to be able to deal with it up front. So those are some of the requirements that you'll see in the analyzer. The other thing that's, there's three things that make this one unique, compared to some others you've seen out there. The first one is that the spreadsheet analyzer is completely editable and customizable, and that is important for two reasons. Number one is I want to be able to see the formulas that are in it, I want to understand the math behind it. And I was very frustrated when I bought an analyzer from someone else and it was a piece of software or password perspective spreadsheet I couldn't learn. The other thing is I couldn't customize it, so I wanted to be able to add rows, change the colors, and do different things with it, which I couldn't do. So you can fully customize this one. The second one is, is that this really has a unique focus on outside investors. So I want to be able to structure the deal in different ways. I want to have equity splits, preferred rates of return, maybe some seller financing. How do all these factor in to the deal? Also, how do I get paid? And how does that factor into the deal? So I can play with different things and look at the impact to the investors and myself. And thirdly, I want something that is always presentable, that I can simply copy and paste into a document, into a deal package, that I can then hand to my potential investors or lenders, banks, other professionals. So those are the three requirements, or four rather, that were really important to me. So let's take a tour of the analyzer. So here's a typical scenario. A deal comes in typically like this. Someone emails you some photos of the property, like this 12 unit. For some deals, you get a fantastic marketing package with a lot of financials in it. Other times, or a lot of times, you get this half-faxed rent roll with some expenses. So you really get a gamut. Your trick is you've got to be able to work with incomplete information. So rules of thumbs are important, and they're incorporated into the syndicated deal analyzer. So this is a 12 unit deal that came across my desk a couple years ago. And what we want to do is we want to quickly answer the question, what is the most I can pay for that? And get back to the broker saying, this won't work for me. This would. How flexible is the seller? And also, once I do get a deal, I want to create the projections that incorporate any kind of investor returns. I want to accommodate different ways to structure a deal. So I want some flexibility there. I also want to show how I pay myself and how that impacts the financial projections. And then from that, really what my end product is, I really want to create an investor package that has all this stuff in there. And I don't want to spend a lot of time doing it. So I want the spreadsheet to do all of that work for me. So let's take a look and see what that looks like. If you look at the summary tab, I'm just going to give you a quick tour of the deal analyzer. So the summary tab is kind of your quick and dirty overview where the assumptions for the entire model come from. And I've already pre-filled this out. Later on, I'll go through the scenario from scratch to show you how it works. I'm just going to give you a quick, dirty tour so you orient yourself on how this thing can be used. So on the summary tab, you enter your units, your asking price, what your contract price is, some information about your loans, your repairs, here's where the acquisition fees is incorporated, your gross schedule income, any kind of vacancies, your expenses. So everything in blue is something that you enter and you can modify, and everything in black is calculated automatically, and you can look at the formulas to learn how it's done. So there's a net operating income, and then it gives you the key indicators here that you're looking for, the cap rates primarily. And then further down, it shows you the investor returns. So depending on how you structure the deal, and we'll get into that later, but down here is where you make a lot of tweaks in how you slice the pie. Who gets what? Is there a preferred rate of return? Are you paying yourself while you're holding the property? Are you paying yourself a disposition fee when you sell it? And then it calculates the returns for the investor, which is really what you want to know at the end of the deal. You're looking for a certain return investor, and you have to structure the deal in that way to achieve that. Now the scenarios tab is something I use early on where I usually take the numbers that are reported in a marketing package, and I enter them into this column. And I quickly see what that looks like, and it gives me my key metrics down here. And then I kind of create my own version of the truth, if you so will. So normally, the asking price is higher, and I'll tweak the actual purchase price, whatever that is, and I may mess with the income and maybe the vacancy rate. Maybe they claim it's 100% occupancy rate. And I know that can't be true. I'll usually use 10%. Their expenses are normally underreported, and I may tweak those based on certain rules of thumbs. And if you look on the right here, there's a button called Show Rules of Thumb, and it kind of enables a whole other side of the spreadsheet, which I'll talk about later. But for right now, this section here helps you with basically creating your own truth of the expenses that you got from the seller. It basically says, look, this expense is low based on experience and rules of thumb. This is low. This doesn't seem right, and I'm going to use X. And you can use this to look at things side by side. You can also have a third column, which is kind of your projected. Sometimes you want to see, well, what do you think it'll look like in a year? This is especially useful if you're repositioning a project or the rents are really low and you're raising them aggressively over the year, you'll say, okay, maybe I'll pay a little extra. Normally you're advised to pay on financials as is and as they have been, but sometimes if you have a project on hand where you're looking to build a significant value, other buyers of that property know that as well, and you may consider paying a little extra, but you want to see what the effect of that is. So maybe you pay a little extra, but you want to feel pretty good what that looks like. So maybe after 12 months, your income is higher. So you put that in and see what effect that has. Maybe in the beginning, your expenses are 53%, but maybe over time you can get it down to 45. So you can basically see what that looks like and what your cap rate is. And let's say if you're buying and you want to make sure you want to stay at a 10 cap or above, you can now tweak this price back up and see, you can go all the way up to what achieves a 10 cap, and maybe you can go somewhere in between. So I use this very quickly to come up with different ways to see different things side by side. And then once I have this, then I go back and I can update my spreadsheet here. So I might say, I might up the purchase price again, I might update the gross schedule income and et cetera. And then what I put here is what flows through the financial model. So from the summary tab is the 10 year P&L projections, and everything in blue is basically is taken from the summary tab. And you can also override things in here, so everything blue you can override. And so it's taken from the summary tab and from the scenarios tab, but you can also simply override this, especially if you're looking to build value, you will want to maybe customize that. Right now, by default, everything goes up by 3%. The rent goes up by 3%, the expenses go up by 3%. And it incorporates the basic net operating income. It breaks out the interest and the principal, so you can see how much equity you're building up over time. And then again, this is where the financial model comes in through the investor. So it shows you if you're paying yourself an asset management fee, how much is that? What's left over? What's the equity split? So what are you actually distributing to your members? What do they put in? What is your cash on cash return? And it gives you a way to gauge value over time. This is a really useful tool if you're building value, and let's say the prevailing cap rates are 8% and 9%. As your net operating income comes up, you can very quickly look at the value that you're projecting. So if I'm buying it lower now because rents are low, what is the impact of higher net operating income have on the value? This tab, the acquisitions tab, is basically your estimate of due diligence costs as well as closing costs. So everything again in blue, you can change, and these are all taken from the previous tabs or you can certainly override them. So there's a lot of rules of thumbs built in here that are very valuable, and a lot of these costs are just fixed. The legal fees to your attorney, the bank doc prep fees, appraisal fees vary a little bit by size but not really that much, and then title and processing fees, and these obviously vary by jurisdiction, but they're at least in the ballpark. So very quickly, does this thing estimate your total closing costs? Your sale tab estimates your resale assumptions, and so it has two scenarios. One is you're reselling after year five, and the one after year 10, and of course everything is keyed off of your net operating income at that time, which is taken from the P&L tab. So you want to put in what your estimated cap rate is on the sellout, which estimates your sale value, then you're going to return your member capital here, and you're going to have the net proceeds, you're going to repay your loan balance, you're going to repay your investors, you've got some closing costs and sales costs, and then so you have a certain net proceeds from the sale. If you're paying yourself a capital transaction fee, what is that, and then what's left over is a split between you and the investor. So the total cash return at closing to the investors is this. And finally, there is a returns tab, and again, I have a five-year tab as well as a 10-year tab. It basically shows you different ways of looking at the returns for the investor. So the first one shows you the summary of investor cash flows and returns. This is the invested money, this is the cash that's being paid out to the investors and what that cash on cash return is, and then incorporates in here the net proceeds from the sale, and then calculates for you the average annual return as well as the internal rate of return here. And it slices a little different sometimes, an investor wants to know in real terms if I invest $100,000 or $50,000 or $200,000, what am I actually getting, dollar amounts. So this one does that here. This one is useful because this kind of shows you how you are being paid. So you are the principal in this deal, and let's say you own 20, 30, whatever percent of this building, and so while this shows you what you will actually, what your cash flow is projected to be. So both cash flow as well as the capital transaction fee, if there's an asset management fee in here, it'll show that in here also, there's none right now. And net proceeds from sale here, so in five years, you hope to make close to $400,000 on this deal based on the way this is currently structured. And then down here is a combined one, so if you want to look at the combined cash flow and the combined cash and cash return, that's done down here. So the same thing happens for the 10-year, it works the same way, just a longer time horizon. I've got a couple other tabs here which calculates the internal rate of return, which is sometimes useful, and then this gives you a snapshot of the loans. So the first mortgage, the second mortgage, provides, and it leverages the amortization tables here and here, and it kind of combines them here and shows you what your beginning balance is after each year, what your interest pays, and principal is paid. Combines them, and then that's combined again in the P&L tab. So that's a very quick overview of the syndicate deal sheet. So again, what's unique about the syndicated deal analyzer is that it's completely editable and customizable. You have full license to do that. That allows you to learn the formulas as well as make it look like you want it. Number two, it allows you to quickly incorporate and see the impact of different investor structures on the returns overall, as well as see what you're getting paid and how that impacts the deal. And lastly, you can quickly copy and paste this and create a deal package very quickly from that. If you've purchased the syndicated deal analyzer, it will come with six detailed follow-on videos that I want to describe to you right now. The first one is a quick and dirty analysis. So you're going to spend some time on the summary tab, and the scenario of your deal comes in, and you want to quickly answer the question, what is the most I can pay for this deal using basic rules of thumb, largely ignoring expenses supplied by the seller. In other words, within five minutes, I want to provide feedback to the broker or the seller saying, this deal won't work for me, here's why, but here's the price that I would be looking for. The second video is understanding investor returns and different ways to structure the deal, incorporating preferred rates of returns, different type of equity splits, things of that nature. The third video is how to pay yourself, incorporating different fees at closing, doing the investment at this position, and looking at the impact of the deal from that. The fourth video is using the side-by-side scenarios tab, and you're using it really in three phases. Phase one, you know, during the quick and dirty part of the analysis, showing different sales prices and cap rates based on what the seller is reporting and what you think it is, and you're also factoring in any kind of upside potential into the deal. In phase two, you're going to use some of the rules of thumb to come up with a more precise way of looking at the expenses that are reported, and also to get feedback to the broker with justification why you think certain expenses are under-reported, which affects the NAY and the sales price. And then in phase three, you want to revisit that scenarios tab to revisit and reconsider any kind of upside potential. In the fifth video, we're going to fine-tune the P&L, meaning that at this point, we're in due diligence. We will have crafted a custom business plan that may call for an increased rents over the course of three years, as well as decreased expenses over the same time frame, and that business plan may find an acceleration of rents more than the standard 3%. So you may create a custom business plan, which might require custom income and custom expenses for each year. So we want to tweak the P&L in that way and see what the effect on the deal is overall as well. And then the last one is we're just going to review the deal as it stands, how we've decided to structure it, what the investors' returns are, and we're going to also use it to create our deal package from that as well that we're going to create with the investors. So that's the overview of the training videos. Thanks again for your interest. I'll talk to you soon.