Episode 189: How To Underwrite Chicago Multifamily Buildings with Essex Director Rick Ofman

Rick Ofman has over six years of experience in commercial real estate and is a Director at Essex Realty Group. Rick kicks things off by defining underwriting and associated terminology. He provides a thorough breakdown of income, expenses, and necessary assumptions. Rick shares insight on forecasting variables such as rehab costs, rent increases, and tax increases to name a few. He explains some valuation terms such as gross rent multiplier (GRM) and cap rate and the impact that interest rates have on these metrics. Rick closes with a bullish outlook on projected rent growth in Chicago and emphasizes the importance of teaming up with a broker that is transparent and has your best interest in mind!  If you enjoy today’s episode, please leave us a review and share with someone who may also find value in this content! Connect with Mark and Tom: StraightUpChicagoInvestor.com Email the Show: [email protected] Guest: Rick Ofman, Essex Realty Group Link: And Then We Had Kids (Podcast Recommendation) Link: Matt Cohen (Network Recommendation) Sponsors: State Farm and Essex Realty Group ----------------- Guest Questions 04:40 Housing Provider Tip: Consider hiring a process server to best utilize your time! 07:34 Intro to our guest, Rick Ofman! 09:24 What is the definition of underwriting? 10:54 Rick discusses making assumptions and explains other variables during underwriting! 19:54 How are expenses underwritten? 23:18 What are some additional underwriting considerations when evaluating C/D class properties? 23:57 Rick explains “hard” and “soft” costs! 32:37 How can buyers accurately determine utility costs?  34:34 What is the next step in underwriting after determining income and expenses? 46:09 How have rental “seasons” varied over recent years in Chicago? 50:02 How is Rick forecasting expense increases for buyers/owners? Wrap Up Questions 52:42 What is Rick’s competitive advantage?  54:02 One piece of advice for new investors. 54:26 What do you do for fun? 54:34 Good book, podcast, or self development activity that you would recommend?  55:30 Local Network Recommendation? 55:50 How can the listeners learn more about you and provide value to you? That’s our show! Thanks for listening! ----------------- Production House: Flint Stone Media Copyright of Straight Up Chicago Investor 2022.