Deal or No Deal Preview : Evaluating Multifamily & BTR Deals Like a Pro [Shark Tank!]

Brief Summary

This YouTube video presents a "Deal or No Deal" session focusing on land deals, specifically a site in Reno, NV, suitable for build-to-rent townhomes. The presenters discuss the deal's key metrics, including zoning advantages, pad readiness, pricing, potential yield, and cost efficiencies achieved through strategic partnerships and procurement methods. They also highlight the use of AI in assessing market absorption potential.

The team analyzes a 13-acre site in Reno, NV, with mixed-use zoning, ideal for build-to-rent townhomes.
The site is pad-ready, saving significant infrastructure costs.
The team employs conservative underwriting and AI-powered tools to assess market viability.

Welcome: First-Ever 5-Person Panel

The host introduces the first-ever webinar featuring a five-person panel, including himself as the "shark" and Daniel's team, who will present real estate projects. The format mirrors their internal weekly process, offering viewers insight into their decision-making. The host expresses excitement about showcasing their process to the audience.

What Is the Deal or No Deal Format?

The session will consist of three "Deal or No Deal" segments. The first segment focuses on land deals, where the team pitches various land acquisitions for zoning, entitlement, and potential flipping or building. Subsequent sessions will cover building acquisitions, with Daniel joining as a shark for those deals. The initial focus on land deals is intended to provide a unique perspective, as most viewers may not have experienced a land-focused "Shark Tank" before.

Meet Daniel Kaufman and the Development Dream Team

Daniel leads the development initiatives, focusing on new construction of multifamily and build-to-rent townhomes. He collaborates with Neil on various projects, including acquiring existing assets. Janine leads operations, Steven manages construction projects nationwide, and JMO leads zoning, entitlements, and land use planning.

Why Land Deals Matter for Investors

Daniel emphasizes the importance of his team, highlighting their roles in the Shark Tank process. Naim is recognized as an exceptional underwriter, supported by Yousef. Danil is a project manager, and Toby manages the extensive deal flow. The host points out that the metrics used for evaluating land deals are similar to those used for apartment acquisitions, making the session relevant to multifamily investors.

The Mission 10K Vision Explained

The host emphasizes that the team will pitch land deals using the same metrics applied to property acquisitions. He highlights that the team will go through 70 plus metrics, most of which apply to apartments as well. He suggests that companies should implement a similar "Shark Tank" process to improve their decision-making.

Pipeline Breakdown: 6,000 Deals → 10 In LOI

Over the past 12 months, the team has reviewed over 6,000 deals, sourced through various channels, including direct networking with attorneys, developers, and city planners. Of these, 714 were underwritten, 140 offers were sent, 24 are in LOI status, 85 are under active consideration, and 10 are in PSA. Many deals are filtered out early based on initial underwriting assessments.

Weekly Activity Dashboard (300+ Calls!)

The team's weekly activity includes making over 300 calls, receiving over 200 calls, sending over a thousand emails, making 45 new connections, and conducting 15 in-person meetings. They visited multiple locations, met with seven banks and nine potential investors, and brought in 137 new deals, underwriting 21 of them.

Today's Deal Intro: Reno, NV Land Site

The host explains that the team starts each session by reviewing key performance indicators (KPIs), including phone calls and pipeline metrics. Some confidential KPIs related to specific cities and quotas are not shown. The team uses Google Maps to examine the properties, with Daniel, Steven, J Mo, and Naim visiting the sites in person.

Zoning, Site Advantages, and Pad Readiness

The team presents a 13-acre site in Reno, NV, with mixed suburban zoning, allowing for both commercial and residential development. The site is already rezoned, saving time in the planning process. The current owner is making the site pad-ready, including infrastructure, utilities, roads, and sidewalks, prior to closing.

Daniel's Site Walk and Development Highlights

JMO explains that mixed suburban zoning allows for a mix of commercial and residential uses, which saved time in the planning process. The team felt it was useful to show some deals that they've seen before and liked, and others that they pitched before that they didn't like, so that this is a combination of those.

Price, Yield, Unit Count Breakdown

The current price for the site is $2,265,120, equating to $15,514 per unit. The pad-ready status of the site represents significant value, potentially saving $500,000 to $1 million in infrastructure costs. The expected yield is 146 units, determined through a massing study involving the in-house architecture team.

Build-To-Rent Townhomes, Not Apartments

The project is a Mission 10K initiative, focusing on building townhomes with a clubhouse and other amenities. The tax rate is 0.56%. The team partners with Southern Brothers Construction and utilizes national subcontractors to reduce vertical construction costs to $128 per square foot.

Cost Efficiency: Vertical Construction Savings

The team is partnering with Southern Brothers Construction in a hybrid approach, bringing in national subcontractors and handling procurement to significantly reduce construction costs. They track insurance costs through a relationship with a national insurance company, quoting on a per-unit basis.

Market Rents, Tax, Insurance Data Deep Dive

Average market rents are $2,540, translating to a little over $2 per square foot. Naim emphasizes his conservative underwriting approach, ensuring confidence in the numbers presented. Market studies are conducted to verify rent assumptions, with Naim's rents typically lower than the market study rents.

Naim’s Conservative Underwriting Explained

Naim explains his conservative approach to underwriting, which involves checking various factors such as tax rates, insurance costs, market rents, and operating expense ratios. He aims to present confident and reliable numbers, often lower than expected market rates, verified through market studies.

AI-Powered Elevation Absorption Scoring

The property has a high elevation absorption score, indicating strong market demand. The team uses AI, powered by a chat GPD string, to analyze analytics reports and compare them with previous data, assigning a score out of 10 to the submarket. Scores above six are acceptable, above eight are awesome, and approaching nine are incredible.

What Makes This Deal Unique

The high elevation absorption score suggests that the site will quickly absorb all units without occupancy issues. The AI-powered scoring system compares analytics reports with historical data to assess the submarket's potential.