A Downloadable Underwriting Tool Prioritizing Accuracy and Speed
When we first launched our firm, we wasted far too many hours in Excel underwriting deals that never went anywhere. We used to jump straight to full discounted cashflow underwritings for virtually every deal that piqued our interest. We’d spend 3-5 hours building a model that was unnecessarily complex.
For raising capital, you need a DCF model. For vetting deals, talking to operators, and submitting offers, you don’t. We needed a faster, 80/20 analysis that told us what we needed to know without bogging us down.
Thus, the SWC Roll-Up Analysis was born.
The Dashboard
Shown below, this simple dashboard gives us the key info needed for deciding whether to pursue or pass, and the analysis takes an hour at most. We just pull in historical financials, tweak the adjustable inputs, and make minor deal-specific changes.
What results is a 360-view of the deal, including:
- Trended historical financials, including revenue and expenses per occupied unit.
- A pro forma sketch based on 3 simple inputs: occupancy, rate growth, and operating margin. It’s not perfect, but it grounds our expectations.
- Asset info including unit mix, vintage, pricing guidance, and potential bid amount (including cap rates and price-per-unit).
- Sources and Uses.
- Debt assumptions (in this example we’re underwriting a bridge-to-HUD, so we include both the bridge and HUD loan).
- NOI-to-cashflow conversion estimates.
- Historical and projected cash-on-cash return based on our assumed capital stack.
- If we have square footage, we include a discount-to-replacement-cost estimate using benchmark construction cost data.
With this model our throughput significantly increased without reducing the quality of our analysis.
You can download the roll-up template here: Link to Roll-Up
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