The Anatomy of a Good (And Bad) Deal

Passive Real Estate Strategies

Do you really understand how to evaluate an investment so you can tell if it is good or not? In this episode, Justin delves into the key criteria for assessing if a deal is good or if it has some red flags. He discusses why it's important to consider utility and insurance expenses when looking at a property purchase and stresses how to analyze rent growth projections and exit cap rates. Justin touches on how rising interest rates affect projected returns and how past indicators are not always indicative of future performance. Tune in for an in-depth discussion about passive real estate investing!

Key Highlights:

[00:01 - 06:14] Uncovering the Secrets of Good Deals

• How to tell if a deal is worth investing in

• Key factors to look for when vetting deals

• How to analyze insurance express, income projection, and cap rates

• Operator's key assumptions and projections to review

[06:15 - 11:58] Analyzing Rent Growth Projections for Real Estate Investment Returns

• Past indicators are not necessarily a predictor of future performance

• Be cognizant of rent growth as it can throw off increases for the life of the property

• Consider the sustainability of the operator's rent growth projections

• Organic rent growth, exit cap rate sensitivity analysis, and time to hit proforma

Key Quotes:

"Just because you're buying the deal at a 4 cap doesn't mean the market is at of 4 cap." - Justin Moy

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