There are several ways to validate the numbers given in the Offering Memorandum. First, you can analyze the deal using the seller's numbers. Run a property analysis based on the numbers given in the Offering Memorandum. You will likely have access to two sets of numbers: the current property income plus expenses and the proforma income plus expenses. Second, you can analyze the deal using historical operating data, which includes Property Rent Roll and Annual YTD Profit and Loss Statement. Lastly, you can analyze from a proforma perspective. Look at the property as if you were already the owner of it. Begin by adding 12 months' worth of categories to your spreadsheet for projected income, expenses, capital expenditures, and debt services.
Real estate can be a great addition to an investment portfolio. But as with any investment, it has t...
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