Using the XLS file recreate the analysis based on Sally’s assumptions.
- How did Sally go about searching for the property (positives and negatives) and what was her investment criteria?
- As a friend of Sally, she asks for your input. How would you approach evaluating this investment?
- How would you evaluate Sally’s approach to underwriting and sourcing the mortgage?
- Based on Sally’s underwriting, experience and lifestyle, does the investment and her role make sense for her?
4 | P a g e – W o o d l a n d s A p a r t m e n t s
Sally was impressed with your thoughts and asks that you join her in this investment as a 50/50 partner. Prepare your own
XLS analysis with a summary investment memo that outlines the returns, strengths, weaknesses and risks associated with the
project. An outline of that memo is as follows:
Executive Summary – Two Pages Max
- Provide a summary (chart format) of the financial returns, strengths and weaknesses with the investment.
- Summarize the “downside” scenario of what could result in the investment losing money.
- Summarize a recommended new offering price for the property “as is” including the study period, deposit
and when the deposit becomes non-refundable.
- Risks – How might the current Philadelphia’s zoning of this asset impact its renovation and its valuation?
- What capital reserve might be appropriate for this investment? How do you distinguish between a)
maintenance, b) repairs and c) capex? Also, is there a need for working capital?
- How does the concept of “loss to lease” apply in context to this investment? Does it impact value?
- Describe the submarket in the content of rent vs. buying a home…is there a clear preference?
Financials – Two Pages Max
- Insert the new Feasibility XLS model
- Explain two key variables that if not met could result in a loss of return / money. Next test the variables
against your cost. Can you live with the worse-case?
Asset, Property and Project Management Plans – One Page Max
- For the scope of renovation work noted herein, how much will be self-performed by your group vs. bid out.
- Who will manage the asset on site? The group or 3rd party? Explain why