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What Do We Look for When Underwriting?

Our underwriting is a huge part of our process and we do not take this lightly. When we have found a property that fits our criteria, we will request information from the selling broker. The selling broker will provide some documents and spreadsheets to us. These documents are a T-12 (stands for Trailing 12), Rent Roll, and an Offering Memorandum. The T-12 is the Trailing 12 month Profit and Loss Statement. This shows all of the income from rent, fees, laundry room, etc. and shows all of the operating expenses, like property management fee, landscaping, and utilities and more. The Rent Roll shows what each tenant is paying for the unit, the unit type (1 bedroom, 2 bedroom townhome, etc.), the square footage of the unit, and any additional fees they pay per month, like pet rent for example. The Offering Memorandum is basically a deck that the selling broker has put together that talks about the market, jobs, the property, comparable properties, and gives an overview of the opportunity.

Once we have all of the documents, our team goes to work inputting the information into the spreadsheet. We also use 3rd party data to provide additional market data, help forecast rent growth, and look at other properties in the market. We also contact a mortgage broker that will give us an estimate of the loan terms.


When we are underwriting a deal, we are looking for ways we can add value to the property. In some cases, that may be reducing expenses, hiring another maintenance person to catch up on the work orders, or adding an amenity to the property. In other cases, that may mean renting a washer and dryer to the tenants, or providing high speed internet at a bulk discount rate.


Another step in the underwriting process is checking out comparable properties. We do it ‘secret shopper’-style so we can get information on the comparable properties and floorplans. This is a great way to see exactly how your property stacks up against the competition.


The overall underwriting process can take hours if the deal meets our criteria. While the numbers on our underwriting are only projections, we use our expertise, 3rd party data, and actual property data to be as accurate as possible.


To learn more, please visit our Knowledge Center. To find out how you can passively invest, please schedule a time with us or contact us, and we will reach out to you.


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H&K Investment Group

~Investing Together~

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