Most apartment listings are bad. Know which ones are worth a call in 10 minutes.
Plug in the numbers from a LoopNet or Crexi listing. You get a Green, Yellow or Red verdict and your strike price. Green means ask the broker for the real financials (the T12). Red means pass.
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Your strike price is the most you can pay for the building. It's a ceiling: the loan is still covered with room to spare, and the goal is to buy under it.
Hugh JonesBuying Apartments since 2008338 UnitsYou've been looking at apartment listings, and you can't tell if any of them are any good. The broker says it's an 8% cap. You have no idea if that's real.
You're not behind. This part just doesn't get taught.
LoopNet is full of overpriced buildings, and the broker's numbers are built to make them look better than they are.
And when one finally does look decent, you freeze, because you don't trust your own call.
You need one number you trust before you ever pick up the phone.
This is the first screen I run on a listing. It swaps the broker's expenses for my rules of thumb and shows a best case and a worst case, because a listing never tells you everything.
The sample listing in the file is 24 units asking $3.6 million. The broker says it makes $230,000 a year. With real-world expenses it's closer to $159,000 to $173,000, so the strike price lands around $2.4 to $2.6 million. That one's a Red, and you pass.
Tonight, pull up any listing on LoopNet. In about 10 minutes you'll see what it really makes and the most you should pay for it.
Every listing, run the way I'd run it
- Your strike price as a best case and a worst case, so you see the honest range instead of one fake-precise number.
- A Green, Yellow or Red verdict in seconds. Green means ask the broker for the T12. Red means pass, and you just got your weekend back.
- How much the broker's NOI is padded, in dollars a year, right next to yours.
- The questions to ask the broker, and they change with the listing, from missing expenses to who pays the utilities to the roof and HVAC on an older building.
- The one line I'd say to a broker on a Red deal so he doesn't write you off and calls you on his next one.
- Every rule of thumb on its own tab, ready to change once you know your market.
Who built this
I've bought every building I own with other people's money. These are students from my coaching program, Jones Inner Circle.
$27, against the cost of overpaying for a building
Overpay by 10% on a $2 million building and you've handed the seller $200,000 you'll never get back. Knowing your ceiling first costs about what lunch does.
The Strike Price Calculator
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Try it on your next listing with 30 days to decide
Email me at [email protected] within 30 days of buying and I'll refund every dollar. You keep the calculator.
Questions
Isn't this just another deal calculator?
Most calculators take the broker's numbers and do the math on them. This one replaces his expenses with real-world ones, shows you the gap in dollars, and gives you a ceiling price and a verdict.
Do I need to be good with spreadsheets?
No. You copy the numbers off the listing, plus one quick Google search for today's 10-year Treasury yield. The tool does all the math.
Can I trust rules of thumb?
It's a screen, not an underwrite. Its job is to tell you fast whether a building deserves your time, which is why it shows a best and worst case. Never make an offer without the real T12 and rent roll.
Does it work in my market?
Every rule of thumb sits on the Assumptions tab, and you can change any of them once you know your market. Insurance already adjusts if you're near the ocean or the Gulf Coast.
Find out what that listing is really worth
The next listing you run, you'll know your ceiling before the broker ever picks up.
Get the calculatorP.S. The deals that kept falling apart weren't your fault. For $27 you'll see exactly why they failed, and you'll know the day one finally works.