Key takeaways
- Trusting seller numbers.
- Optimistic value-add timeline.
- Wrong debt for business plan.
- Underestimating capex.
- Inadequate insurance.
Core concepts
Underwriting errors
Inflated rents, underbudgeted expenses, missed property tax reset.
Business plan errors
Value-add takes 50% longer than planned.
Capital stack errors
Bridge debt past stabilization = refi crisis.
Step-by-step framework
- 1Independent T-12 audit.
- 2Conservative value-add timeline.
- 3Right debt for stage.
- 4Capex schedule with reserves.
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Common mistakes to avoid
- Skipping insurance walkthrough.
- Underbudgeting payroll for on-site staff.
Frequently asked questions
Worst error?
Bridge debt without refi exit certainty.
Value-add overrun?
50% time, 25% cost typical.
Tax reset?
Often 50–100% increase at sale.
Insurance trend?
Hardening hard — model + 30%/yr.
Action checklist
- ☐T-12 audited.
- ☐Timeline + 50% buffer.
- ☐Debt matches plan.
- ☐Capex reserved.
- ☐Insurance verified.
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