5d • General discussion
Tuesday - Decision Framework
Strong deals have margin for error.
Weak deals only work if everything goes exactly according to plan.
When analyzing a property it helps to stress test three assumptions:
Rent assumptions
Vacancy
Maintenance
For example:
What happens if rents are 10% lower than expected?
What happens if maintenance is double the estimate during the first year?
Does the deal still survive?
Professional investors constantly ask these questions because uncertainty is unavoidable.
What assumption do you personally find hardest to estimate?
Rent
Repairs
Vacancy
Financing
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Tuesday - Decision Framework
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