No one likes surprises. Despite that, how you model a deal is one of the most under-discussed yet critical parts of multi-family investing. In today’s episode, we talk with Nathan Cloud whose superpower is spotting risk and underwriting deals. With a background on Wall Street as a senior equity trader, Nathan knows how to play the numbers game. We explore Nathan’s experiences on Wall Street, including how he once lost six-figures while on a trip to the bathroom. After chatting about discovering real estate, Nathan drills down into the need to develop a system that you can use to underwrite your deals.
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Your system, as Nathan explains, will be how you figure out if a deal is perfect for you or if it really is too good to be true. We discuss how your system should account for the area that a property is in and the importance of understanding the socioeconomic landscape that you’re buying into and how they factor into your risk. From adding custom Google map layers to figuring out crime stats, Nathan shares the tools that he uses to assess risk and underwrite properties. We then talk about how the pandemic has affected his underwriting and he references the numbers to show how COVID-19 will most likely affect his deals. We touch on the topic of rent growth, what lenders are now requiring by way of an emergency fund, why he pays close attention to rent rolls, and how his team has grown their newsletter subscriber numbers. Near the end of the episode, Nathan shares how he’s recently improved his business and how he finds his investors. Tune in to hear more about underwriting risk.
Key Points From This Episode:
- Nathan’s Wall Street background and how it taught him to manage risk.
- How underwriting is Nathan and his team’s superpower.
- Developing a process to figure out what a good deal is to you.
- Why the devil is in the details; you have to understand the location of any multi-family property.
- The tools that Nathan uses to assess risk and underwrite a property.
- Judging an area’s growth patterns by the stores that are popping up there.
- Why how you model a deal is the most important aspect of multi-family investing.
- How Nathan’s underwriting has changed due to COVID-19.
- Why sponsors shouldn’t necessarily be looking to exit strategies despite the pandemic.
- How Nathan’s rent growth and emergency fund strategy has been affected by COVID-19.
- Red flags and details that Nathan pays extra-careful attention to.
- Hear how Nathan has built his newsletter and subscriber base through LinkedIn
- Why Nathan uses virtual assistants and what only he can do.
- Streamlining your process by getting an investor portal.
- Building your investor list and relationships through transparency.
[bctt tweet=”When underwriting, we’re layering free information on median incomes, crime, new developments, Starbucks, Home Depots — all onto Google Maps. — Nathan Cloud” username=”whitney_sewell”]
Links Mentioned in Today’s Episode:
About Nathan Cloud
Nathan is the founder and principal at Cloud Capital where he oversees acquisition strategy and capital raising for the firm. Before starting Cloud Capital, he worked as a senior equity trader for a proprietary trading firm in New York City, where he managed multiple portfolios in excess of $50 million. Mr. Cloud is an experienced investor and is now focused on implementing Cloud Capital’s growth strategy to acquire Multifamily and Assisted Living Communities throughout Georgia and Texas. Nathan lives in Dallas, TX.
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