Every deal we look at gets sixty seconds of arithmetic before it gets an hour of anything else. Type six numbers from any deck you have been handed, and read the truth.
Six numbers
$
$
%
Always assume some. If the deck says zero, that is the first thing it got wrong.
$
Taxes, insurance, management, maintenance. Not the mortgage.
$
I do not have the debt service number
$
%
The napkin
Verdict
Enter the six numbers.
The bad year stacks the bad news together, the way real years arrive: rents flat, vacancy one point worse, operating expenses up six percent. If you know the insurance line, stress that a further 25% yourself and enter it above. Insurance has broken more Midwest deals this decade than any other item.
The questions to ask about this.
Twelve questions to put to the sponsor behind this deal, as a printable PDF with room to write. Free, no obligation, and your figures are not attached and never sent — the arithmetic above stays on your device.
What to ask this sponsor
Both are drawn from the twelve questions in The Operator Test. Ask them out loud, on a call. A deck cannot answer for them.
If you would rather have someone look at it with you, we read these for a living. No pitch, and we will tell you if it is fine.
Keep a copy of this napkin.
Optional, and it costs you nothing. We will send this one napkin and nothing else unless you ask for more. Your figures travel as an image; we do not store them.
The Operator Test
This calculator is one instrument out of a longer method: twelve questions to ask any sponsor, the five gates every acquisition must clear, and the five places optimistic pro-formas die. Written to be run on us as readily as on anyone else.