MIM Vol 1 Q1 2019 VERSION 00 FEB 8 FINAL

VOL Vol 11 Q1 2019
Multifamily MULTIFAMILY Insight IN- Magazine
5 Multifamily Rental Revenue
Growth Strategies
Multifamily Finance:
Is it Still a Great Time to
Be a Borrower?
Smart
Property
Management
in 100 Words
Vol 1 Q1 2019
LOREM IPSUM DOLER
FREE
eBook: 25 Biggest
Mistakes Real
Estate Buyers Make
AI Driven Real Estate
Underwriting:
An Interview with
Marc Ruzten of Enodo Inc.
5 Multifamily Rental Revenue
Growth Strategies
Multifamily Finance: Is it still a
Great Time to be a Borrower?
Editorial: I am Jamal
Khashoggi
Editorial: I am Jamal Khashoggi
-1-

Multifamily insight Magazine
From the Editor
In this edition of Multifamily Insight Magazine...
John Wilhoit
In this, edition of Multifamily
Insight Magazine,
we present an extended
conversation with Marc
Ruzten of Enodo Inc.
Marc has worked tirelessly
towards finding
solutions and “cracking
the code” within multifamily
valuation and investing.
David Garfinkel of Northmarq
writes about the
current state of commercial
mortgage financing.
In every issue it is our
objective to deliver new
knowledge, followed by
confirming best practices
and deliver at least
one topic that makes
you think.
If you have a
product or service
related to the multifamily
industry you
believe is of interest
to our readers please
reach out.
jwilhoit@win-rei.com
MULTIFAMILY INSIGHT
MAGAZINE SUBSCRIBE
-2-

What’s Inside
4
10
AI Driven Real Estate Underwriting.
An Interview with Marc Ruzten
How do you compete for deals against big companies?
By leveling the playing field with technology.
5 Multifamily Rental Revenue
Growth Strategies
Year-over-year rent growth is the most important
driver of revenue growth. How do you get it?
Multifamily Financing: Is it Still a Great
Time to be a Borrower?
All of our capital sources are lending, and that is
a good thing.
12
Editorial: I am Jamal Khashoggi
Mr. Khashoggi and I have much in common...
15
FEATURED ARTICLES
4 AI Driven Real Estate Undewriting 14
An Interview with Marc Rutzen
10 5 Multifamily Rental Revenue
15
Growth Stratetgies
12 Multifamily Financing: Is it Still a Great 17
Time to be a Borrower
Smart Property Mgt in 100 Words
In this issue: Programmable Thermostats.
Editorial: I am Jamal Khashoggi
Book Deal with Free Shipping
Get two books, Multifamily Insight Vol I & II
-3-

AI Driven Real Estate Underwriting
Artificial Intelligence (AI) Driven Real Estate Underwriting with Marc Rutzen
My guest is Marc
Rutzen. Marc
is the CEO and
co-founder of Enodo
Inc.
Enodo is an automated
analysis platform
for multifamily real
estate. Our discussion
is on the use of
artificial intelligence
(AI) in real estate
underwriting.
How does an
individual investor or
mid-sized operator
compete for deals
against big companies?
By levelling
the playing field with
the use of technology
that allows real
estate investors to
see and use the best
and most current
data.
Enodo Inc. offers one
such solution that is
cost effective and
races past the fluffit
delves directly into
the core financial
concepts an investor
needs to have for
making investment
decisions in real
time.
Marc directs the
development of the
platform including
user interface and
research & development
for new
product features on
the platform. Marc
is a licensed broker.
He has a Master of
Science Degree in
Real Estate Development
from Columbia
University. Welcome
Marc.
-4-

I think AI (Artificial Intelligence)
is something that
everyone is familiar with.
What they are not familiar
with is that AI is having an
impact on real estate and
particularly multifamily.
What can you share with us
about that?
Marc Rutzen: To give some
context, people tend to
conflate real estate data
and data analysis and AI and
they’ll call it CRE tech. Over
the past 20 years there has
been a renaissance in real
estate data; twenty years
ago you didn’t have data.
There was no transparency
into transactions. You didn’t
know who owners were
easily. You didn’t know what
property trading prices.
There was no Costar,
Axiometrics, Real Capital
Analytics. These platforms
have brought data to the
fore and made it more
transparent so we know
what’s going on in the market.
The problem today is that
there is just so much to
analyze that no one person
can make sense of all the
data. Analyst pay for data
sources and then devote
further resources to confirm
the data is accurate, trying
to analyze it, make sense
of it and then fill a narrative
for a particular asset.
What I see AI doing and
what Enodo is trying to do,
our mission; is to quantify
the drivers of real value.
Not just provide more data
to analyze but tell you what
that means in terms of
investment potential. I see
a lot of disruptive potential
not just from our company
but a lot of companies in
the space that are pushing
for the adoption of AI and
it’s getting some traction.
What Enodo is trying to do,
our mission; is to quantify
the drivers of real value.
John Wilhoit: What I like
about Enodo as a user is
that it’s built for real estate
professionals and more
specifically for multifamily
which is my area of expertise.
Marc, you say that
Enodo automates the underwriting
platform for the
multifamily industry. Talk to
us about that.
Marc Rutzen: Think about
what you go through on a
typical deal analysis. If it’s a
marketed deal you’re going
to have a rent roll and T12
to analyze. You’re going to
look at the market for your
comps (comparable assets)
and you’re going to compare
rents to your comps
and see if what they’re
achieving is reasonable.
Enodo automates the underwriting
platform for the
multifamily industry
You’re going to put
everything into your underwriting
template and put
in your deal assumptions.
Then export everything
into a finalized product and
then use this to indicate to
an analyst or your superior
to do the deal or not do
the deal. In the case where
you’re the owner underwriting
the deal; you are pursuing
the transaction to syndicate
equity for the deal and
get financing from a lender.
What our platform enables
you to do, I know this is important
to you John, with
your writings about rent roll
analysis, we have a rent roll
parser on our site that free
right now. You can load any
rent roll. This will work with
most property management
software. Export your rent
roll from property management
software and load a
POD into Enodo. This will
parse floor plans, percent of
market rent achieved by inplace
leases and lease turnover
exposure (when leases
will expire). It will take out
cost-to-lease so you can
see what the effective rent
is. All of this happens in a
few seconds. That is something
that helps you to tee
up the data and not waste
time manually parsing the
rent roll.
John Wilhoit: What you’re
saying is that utilizing the
Enodo platform compresses
the amount of time required
to perform underwriting?
Marc Rutzen: Yes. Absolutely.
It’s a huge time-saver.
Once you have uploaded
the rent roll and T12 into
the system you’re going
to be able to seamlessly
compare your rents with
the market and see if they
are reasonable and gain
some insight into if a deal
is performing as compared
to similar assets in terms of
year built, number of units
and location and see if your
operating expenses are in
line with the market. That’s
a quick way to use AI to
underwrite deals and assess
potential upside.
John Wilhoit: Split off for us
how to utilize Enodo from
an operator’s perspective
and then from a developer/
builder perspective.
Marc Rutzen: Say the
scenario is this: you have a
property built in the 1980s
that has not been renovated
and in need of some
TLC. You think that there’s
some potential upside if
you were to invest some
money in renovating units
and bringing them up to
market. What Enodo does
is enables you to see which
amenities (amenity by
amenity) are going to add
the biggest rent premium.
This folds in dirctly with
our mission: to quantify the
drivers of real estate value.
Part of that is delving into
determining the rent delivery
value of granite counter-tops
versus hardwood
floors. Asking the question:
what’s going to bring the
biggest impact on rents:
stainless steel appliances
versus a rooftop deck.
Which one will bring the
highest rent? Enodo does
that with each individual
amenity allowing you to
build your amenity package
in the platform and see how
it will perform if you were to
invest those dollars and do
those renovations.
John Wilhoit: That’s
from an acquisitions
perspective? If you’re looking
at it a deal that’s on
your plate for potential
acquisition, utilizing the
Enodo platform can help
you not only analyze the
deal but analyze where redevelopment
dollars should
go in the deal?
Marc Rutzen: Yes. If you
already own the property,
you can see, am I charging
the best possible rent,
am I optimizing my rent
-5-

for this asset based on
everything that’s going on
in the market? It doesn’t
have to be a value-add deal.
You could just look to see
if you’re in line with the
market and how you should
adjust your rents to maximize
revenue.
John Wilhoit: Let’s talk
about a new development
deal, brand new coming out
of the ground. How does
Enodo assist with underwriting
that transaction?
Marc Rutzen: Enodo
is collecting data from
about two million properties
nationwide on a daily
basis. This data is coming
from Property Management
Software, property web
sites, user uploads of rent
rolls and T12s. What we’re
doing is building all the
components of real estate
value into our data. We assess
and quantify buildings
individually in each market
so that you can hypothetically
build a building from
the ground up having this
comparable data.
Enodo is collecting data
from about two million
properties nationwide on a
daily basis.
That new building is just
the sum of its parts; put in
the number of three bedroom
units and the square
footage of those units then
the number of bathrooms
in those units and continue
this for the entire unit mix
and you are building the
build-out virtually. Then add
amenities to each one of
those different floor plans.
Enodo allows you, as the
developer, to virtually build
out your amenity package
at the community level and
at the individual unit level.
Using Enodo, You Can buildout
a new development –
virtually.
You can instantly see as
soon as you’ve crafted it
(and you can do all of this
in the platform) a virtual
model of the asset. You
see what rents the new development
it can generate
as if it were to exist today.
You see what the comps
are (the closest comps).
For comps, if you’re doing
development in the
suburbs if there’s no new
development near by the
Enodo platform will go to
the next similar suburb
to your building and find
comps. This way you always
have comparable properties
to compare.
And then finally the Enodo
platform will show you the
operation as stabilized. You
can then represent to a
lender or an investor this is
what stabilized operations
look like were the asset
built.
John Wilhoit: Tell me how
artificial intelligence is
assisting in making better
decisions about those
structures that you just
mentioned.
Marc Rutzen: On our
platform, type in an address
for your new development.
You’re able to see, if you’re
crafting a new development
from the ground up,
average square footage for
units of each type in the
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market and what frequency
of properties have different
amenities. For example, I
go into a market and I can
see that ninety percent
of buildings in this market
have a pool that means I
need a pool or I’m not going
to be competitive. And
then in Enodo you can click
on that amenity and see
what you’re going to get
in terms of rent for that
particular amenity. What’s
great is sorting by the
most frequent amenities
in the market. You could
sort by the highest premium
and craft your amenities
packages to select
the highest premium and
the most frequently listed
amenities.
John Wilhoit: The “AI” part
is having all of that on one
page at one time?
Marc Rutzen: Yes. The “AI”
is being able to individually
quantify what the variables
are doing. Otherwise you
can’t do it. You know that
Building A has X Y and Z
and Building B has X Y Z and
one generates more income
but you don’t know exactly
why. The AI analyses a
hundred different variables
recognizing walk-ability
in one location is slightly
higher and the median
income slightly higher than
a similar location. Therefore,
even with similar amenities
one location is going to
have a higher premium than
another similar location.
John Wilhoit: So, with
Enodo I can look at comps
and review the amenities in
each of those comps
determine which ones are
adding the most value?
Marc Rutzen: Exactly.
John Wilhoit: This tells
me that Enodo is amenities-centric
and it allows
me to add value based
on what’s occurring in a
particular market and not
the market in general is that
correct?
Marc Rutzen: Correct.
John Wilhoit: Tell us the
difference between AI and
machine learning. What’s
the difference between
those two?
Marc Rutzen: There is
no difference. Machine
Learning is AI when you’re
training a model. What is
commonly understood to
be AI is a little bit different
when you’re talking about
it from a non-data science
perspective.
John Wilhoit: For users of
the platform they represent
the same thing?
Marc Rutzen: In terms of
what they see in the platform
it represents the exact
same thing. The only difference
is that in AI the way
people see, the way people
view AI, the machine takes
data and determines exactly
what to do with it and that
result is the output. I’s very
nebulous and frightening,
right? You don’t know what
it’s doing exactly. But the
way we craft these models
is we select the features.
Because we’ve surveyed
hundreds of real people we
know which variables are
important.
Then, we feed those variables
into our model.
We control the range of
influence that variables can
have so we don’t get anything
crazy excluding things
like seeing a rent premium
because it rains slightly less
in one area. If you just fed
variables randomly into a
model you could come up
with some weird stuff like
that. We put a lot of human
intelligence into our model
on the front end so that
you don’t get crazy results.
John Wilhoit: Tell us
more about how Enodo
provides locational characteristics
and demographic
characteristics. How can
users of the Enodo platform
implement this information
into their decision-making
processes?
Marc Rutzen: What our
platform does is it takes
median income, population
density, average family size,
the proportion of one-beds,
two-beds, three-beds in
the market, the walk score,
transit access and negative
externalities - all the things
that real estate people
intuitively know have an
impact. If you were to put
all this data into an excel
sheet and try to tell me
the impact of each variable
it would be impossible.
There’s is not enough datayou
can’t fit enough data
into Excel. What the Enodo
platform does is quantify
each variable. Then it tells
you if you land on a place
on the map the market is
contributing this much (X
dollars). Thus, anything
you do to this property the
market is
contributing exactly this
much. In other words, just
being in this area generates
X dollars towards rents.
The Enodo platform
quantifies each variable
As you look at the different
amenities and add them to
your virtual model, each
one is a component and
tells you what it adds to
rents. The amenities package
is going to be the sum
of the parts from the community
and from the unit
level. Our data scientists
are looking to bring into the
platform a tool that allows
our customers to click on
a map and see what the
key drivers of value are
in a market. Imagine being
able to see that an area has
an 80% college educated
population and median
income of $110,000 a
year- that’s what’s driving
value the most. You know
in this area that’s what’s
driving value the most. So,
it doesn’t matter if you do
anything else. It’s that kind
of insight that helps people
craft your plan for an asset,
your plan for an investment
to maximize value.
John Wilhoit: We’ve spent
a lot of time talking about
the income side. How
does a developer or an
analyst review the operating
expense side of a deal using
Enodo?
Marc Rutzen: On the
operating expense side,
what we do, we pull in data
from all the T12s that
are uploaded from users
(anonymously of course).
We’re taking that data and
keying it into a location
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and then loading it into the
algorithm to train. We’ve
loaded 3900 CMBS (Commercial
Mortgage Backed
Securities) deals nationwide.
These are CMBS deals
that are not distressed. We
control for those that have
too low of an DSCR (Debt
Service Coverage Ratio)
or had notes on the deal
that it was under water.
We use CMBS data and we
use benchmark data from
NAA (National Association
of Apartments and IREM -
Institute of Real Estate Management.
We also have partnerships
with several lenders that
contribute T12 operating
statements from closed
transactions nationwide. We
feed all this data in and we
control for each variable
the same way we do on the
income side; we do this on
the expense side. We control
for each variable and
determine, based on the
number of units, the year
build, the market, net rentable
square footage and income
profile for this property,
those being the biggest
drivers, that you should
be at this level for salaries
and personnel or that you
should be at this amount
per unit to budget for insurance,
taxes et cetera. We
calculate that as a series of
market benchmarks and
then compare the outcomes
to your uploaded T12.
This calculation compares
your T12 to market benchmarks
delivering actionable
information about your
property and if it is in line
with the market in terms of
each individual line item.
John Wilhoit: When you say
“market” what do you mean
by that?
Marc Rutzen: One of
the things that Enodo
has created is an algorithm
that will dynamically
pull in census tracts that
are similar in terms of
supply and demand fundamentals;
similar types of
properties and percentages
of different unit types and
rent that they’re achieving
and similar types of people
seeking those assets.
What we do is dynamically
build a market area instead
of drawing a rectangle or
circle or some oblong shape
to statistically determine
what your effective market
area is by bringing in adjacent
census tracks until
we’ve got enough data to
analyze statistics.
Going into an urban area the
“market” could be as small
as a few blocks. Going into
a suburban area the market
could be wide yet still
represents your effective
market area with just less
density.
John Wilhoit: We understand
that markets are
not round or square. Markets
are certainly property
specific. I think what
they’ve done within this
product can outline competitive
market areas versus
something that is often
esoteric. Marc, you don’t
use the term sub-market?
Marc Rutzen: Yeah, we don’t
use the term sub-market
because what is equivalent
in size to a sub-market is
determined algorithmically.
John Wilhoit: And that offends
the senses for those
of us that have been working
in sub-markets for years
and years. That’s all we
know, right? We know that
we like this sub-market and
we don’t like that sub-market.
What you’re doing with
AI is redrawing those lines
where the sub-markets are
more distinctive around a
specific asset or group of
assets versus that oblong
or square or circle that you
were talking about earlier.
That does throw people I
think, originally, to be able
to look at the outputs from
Enodo and see something
different than sub-markets.
Your response to that is?
Marc Rutzen: Our response
is to ask how is the
sub-market determined?
What data went into that
sub-market and is it continually
updating and refining?
If you look at community
areas within the city they
were drawn decades ago
and they don’t change.
Does that neighborhood
represent the people in that
neighborhood and the properties
in that neighborhood
or have those boundaries
changed? That’s why we’ve
built an algorithm that’s
dynamic that will show, at
any given point in time, the
most relevant competitive
market area. And that may
offend the senses but you
want the best answer- you
don’t want the answer
that’s most comfortable.
John Wilhoit: Which is why
we’re talking about artificial
intelligence driven
-9-

decisions versus things that
are based on what might
have been in a textbook
from 1982.
Marc Rutzen: Exactly.
John Wilhoit: There’s
always somebody that
wants to know how you
come up with that number,
right? My question to you
Marc is about Enodo Rents.
How did you come up with
that number and how do we
know it’s a number we can
rely on?
Marc Rutzen: The way we
get to Enodo Rents is by
utilizing both in-place and
advertised rents. This is
after removing outliers- so
we don’t take anything like
six month leases or something
that’s going to be
artificially high. We train on
that data alongside all the
demographic and economic
and local demand drivers.
We will calculate what we’ll
get (what rents will be) if
you were to take this unit
in this building to market
today. What are you going
to be able to get for it?
The market rent that you
see in rent rolls is not necessarily
appropriate market
rents to use. The trends in
the market when analyzed
by AI can inform you as to
where rents are going and
where the optimal price
point is more so than just
looking at the operations of
your own asset. You have a
look at the entirety of market
and what’s going on to
determine where to price
your units.
John Wilhoit: That’s
right. And that’s where
I come in with my book
Rent Roll Triangle: The Ultimate
Rental Property Grading
System because you’re
not just looking at what’s
on the rent roll. There’s
always going to be a disparity
between gross potential
rent, effective rent, stated
lease rents (what’s in the
lease document) and collections.
So, there’s four different
price points none of
which necessarily tells you
effective rents on a given
day until you analyze what
those differentials are and
see where you should be
from a market rate perspective.
Marc Rutzen: Right.
John Wilhoit: Back to Enodo
Rent...
Marc Rutzen: Enodo rent is
not biased. There’s no bias
from the property managers
saying I’ll never hit
those numbers or someone
saying we’ve got to keep
rents artificially low to keep
occupancy high. There’s
no human bias whatsoever.
We’re just looking at pure
data in the market and
determining what your price
(rental pricing) should be.
You may have different
opinions about it and in
some cases, there may not
be enough data in the market
and Enodo rent may
not be the right one to use-
I’m not going to say it’s
perfect. But in a lot of cases
you’d be surprised. You
look at the Enodo prediction
of rent and you compare it
to what you think the rent
should be and there could
be a pretty sizable Delta.
Then maybe you might
want to reconsider, wait a
second, can I raise rents
for this unit type and if I
do you I’ll make some more
money on the deal, right?
So, that’s what Enodo Rent
is there to provide; that
market context and the
upside or downside potential
for an asset.
John Wilhoit: It’s good to
have a target, and more
than one to compare, so
that when we go out into
the marketplace we’re
not relying on just what’s
in advertised rental rates
because that doesn’t tell us
anything about discounts
or concessions. Enodo
Rent takes that into consideration
and tells you, or
shares with you, what a unit
should be renting for net of
concessions. Is that a fair
statement?
Marc Rutzen: Absolutely.
John Wilhoit: There have
been times when two
months free rent was
not uncommon in metro
Houston, Texas. So, that
doesn’t necessarily tell you
what stuff rents for, right?
If there’s nothing sharing
with you, the buyer or the
operator, that a market is
offering two months free
rent as the norm to get
occupancy anywhere near
normalization. Enodo Rents
takes that factor into consideration
and tells you
what the rents are versus
what some conflated or
inflated number is that may
or may not be real.
Marc Rutzen: Yep. That’s
the beauty of it.
John Wilhoit: This article
is a transcrbed from a live
recording and podcast with
Marc Rutzen about
Artificial Intelligence Driven
Real Estate Underwriting.
We’ve been talking with
Marc Rutzen of Enodo Inc.
Use the discount code:
MIM_50 to try out the
product.
Give it a try. Marc loves
feedback. Hit them up on
the Enodo Inc. web site
with any questions that
you have. They’re always
improving the product. I
endorse Enodo and I think
they’re building a great
system. I think it’s got legs
and a great future. Hopefully
you’ll take the time
to check them out and see
they are delivering on their
promises.
Marc Rutzen: We’re excited
to hear from your audience.
Tell us what you think.
We’re always improving as
John said. We look forward
to working with you.
To listen to the Podcast of this
interview Click Here.
MULTIFAMILY INSIGHT
MAGAZINE - CLICK TO
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-10-

5 Multifamily Rental Revenue
Growth Strategies
By John Wilhoit
Every operator wants rent growth. Rent growth, rent growth, rent growth. Year-over-year rent growth
is the most important driver of revenue growth. How do you get it? Like any business, multifamily requires
an action plan for growing revenue including multiple moving parts to gain traction towards to
goal. Following are five methods to get there faster. For more tips about multifamily operations and property
management read John Wilhoit’s book Multifamily Insight Vol 1 and Vol II.
RENEWALS.
1
Always at the top of the list. Nothing keeps
income ticking like retaining in-place residents.
Always start the renewal process early. Recognize
this as your number one tool for maintaining
stabilized occupancy. If there is a leasing
office on site, having posted hours is a small
thing that brings big results because your residents
(customers) know when the “store” is
open. Does your asset have trained staff responding
professionally? Is customer service
at the forefront of company policy with an eye
towards quality customer service? These are
operational must-haves for increasing renewal
rates.
2
1
RESIDENT SCREENING.
Our customers make or break our business. Set
your standards, stick to your standards. The
‘great recession” created the need for some
changes in credit underwriting but not so much
as to bend past the point of reasonableness.
Today, with a full-employment economy and
historic low housing affordability, the renter
pool is robust. Even still - think long-term and
resist the tendency to accept below-standard
applications for the sake of a quick bump in percent
occupancy. Just like the fairy tale: the tortoise
tends to win the race.
2
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3
EXPAND “OTHER INCOME”.
3
If your other income revenue includes only application,
late and pet fees there is room for
expansion. Storage, services, cable revenue
sharing, RUBS (Renter Utility Billing Systems),
parking (premium parking spaces). Do some
brain storming to see what works best for your
assets. To learn more read this article at Multifamily
Insight: Property Management: What is
the Composition of Your Ancillary Income?
4
4
RESIDENT REFERRALS.
Are you offering existing customers an incentive
to bring in their friends and co-workers?
Resident referrals are a cost-effective method
to create an opportunity to have satisfied customers
introduce your property to new customers.
Consider the positive financial impact
of just one referral a month at each property
under management - convert this to dollars and
you can see why this should be implemented
across all of your ;assets under management.
Read: Multifamily Apartment Marketing: 21
Leasng Touch Points.
5
EMAIL.
5
Do you email your customers and potential customers?
Oh no! Not another task! Like with
this blog, we try to keep in regular contact with
our readers via email. An email as often as only
once a month can assist in maintaining name
recognition. It’s just one more place to keep
your name in front of your customers. That’s
why Nike pays to have their “swoosh” on every
high-profile athlete possible. Multifamily Insight
uses, and highly recommends: Aweber Email
Management System.
-12-

Multifamily Insight Magazine
Multifamily Financing: Is it Still a
Great Time to be a Borrower?
By David Garfinkel
I wrote a similar article in 2012
titled “It’s a great time to be a
borrower”.
Is this how you choose a
real estate investment?
Maybe there’s a better way.
Learn how experienced investors evaluate
rental property investments. No hype, no
motivational cheerleading, no upsells –
just a straightforward, comprehensive
series of video lessons that teach you the
formulas, metrics and techniques.
Click to learn more.
The 10-Year US Treasury
was at a 60-year
historic low, hovering
around 1.40%. Today, the
10-year Treasury is now at
2.65%. Here is part of what I
wrote then:
“The big question is when
are interest rates going up?
Since we are at historic lows,
there is a lot of speculation
that interest rats will rise.
But when? Once must assume
that eventually, rates will
start to climb, and then the
next question is where will
they stop?”
Well, rates are up, but where
will they stop? (rates jumped
after the 2016 election). The
bigger question may be, is
it still a good time to be a
borrower? I’d say
the answer is yes. Life
Insurance Companies are
currently lending; Fannie
Mae, Freddie Mac and
HUD are still aggressively
lending on multi-family,
and the CMBS is market is
back (Commercial Mortgage
Backed Securities, also
known as Conduit loans).
Life Insurance Company
rates can be had somewhere
around 4.25% – 4.75% fixed
for 10-years. Freddie and
Fannie have 10-year rates
around 4.75%, with HUD
rates around 4.50% fixed
for 35-years (plus Mortgage
Insurance Premium, also
known as MIP). CMBS
rates can be had for around
5.25% – 5.50% fixed for
-13-

10-years. These assumptions
are based on fuller
leverage. Historically, these
are still great rates!
All our capital sources are
lending, and that is a good
thing. Fannie/Freddie and
HUD are lending to historic
levels.
The fact that CMBS is back
is a good thing, as this has
opened a new channel of
capital into the marketplace.
CMBS is lending on all
property types and still has
attractive debt. The hope is
that these lenders can pickup
loans that a Life company
may not bid as aggressively
for, including loans where
leverage needs to be pushed
or in markets that aren’t
major metropolitan areas.
It is crucial to note that
the fundamentals of
underwriting are still very
important. Lenders aren’t
pushing leverage. They
are evaluating each loan as
it relates to location, lease
rollover, borrower strength
and many other factors for
making a real estate loan.
But if the fundamentals
work, then you should be
able to take advantage of
still very attractive longterm
rates. It is still a great
time to be a borrower. John
Wilhoit’s book about rent
roll analysis - How to
Read a Rent Roll: A Guide
to Understanding Rental
Income is a great place to
learn about the fundamentals
of lender underwriting.
David Garfinkel is an
employee of NorthMarq
Capital. His views and
opinions expressed in this
article are his alone and
do not represent the official
views of the company.
David can be reached at
Dgarfinkel@northmarq.com
314-301-1808.
MULTIFAMILY
INSIGHT MAGAZINE
SUBSCRIBE
-14-

SMART PROPERTY MANAGEMENT
In Every Issue! 100 Words to make you a better Property Manager.
Wi-Fi programmable thermostats are creating
thousands of dollars in savings for property owners
every day. They can be accessed from your
on-site or central property management office to
reflect real time needs at the property level. Snow
coming? You can make sure each vacant unit has
heat set correctly to avoid costly repairs from
freezing pipes. Summer showings only in the afternoon?
Program vacant units to cool from 12-5
only. Start with installing them at turnover and
expand over time. A simple cost/benefit analysis
should reflect a payback of less one year. That’s
smart property management! Read John Wilhoit’s
book How to Read a Rent Roll to learn professional
rent roll analysis..
Multifamily
Cash Buyer
Major U.S. Markets
100+ Units
$10,000,000+
John Wilhoit on Real Estate Podcast
Understanding Leverage &
Liquidity in Real Estate Investing
Click to Listen
How to Read a rent roll - Do you know
all the elements of a rent roll? This
book is exclusively for people serious
about buying rental income property.
Rent roll analysis validates contractual rental
revenue; it’s is up to you to get this right.
Buying rental property is not an impulse purchase.
As a rental property buyer, you need
to know how to build, understand and use
the rent roll to your advantage.
This book is a technical guide to rent roll
analysis. The objective is to narrow your
attention to one thing and one thing only:
estimating the validity of contractual rental
revenue collected from rental income property.
Why is this important? Because getting
it wrong undermines the goal of estimating
Net Operating Income (NOI) accurately.
-15-

Multifamily Insight Magazine
I am Jamal
Khashoggi
“ ”
BY JOHN WILHOIT
Mr. Khashoggi shared this bias; that truth is worth sharing.
Mr. Khashoggi and I have much in common.
Predominantly, we are both
passionate about writing. If the two
of us were awkwardly introduced in a social
setting, once it’s established we are
both writers the perfunctory news-weather-sports
conversation is dismissed in exchange
for the common ground of sharing
stories that may have some small impact on
the world at large.
We might have discussed
wine, where to
find the most comfortable
shirts or how long
we can get away with
“not shaving”. Our
worlds diverge there; I
was born and raised in a
country where the right
to free speech is protected.
Mr. Khashoggi
was not. My constitutional
right to say
and write what I want
-16-

is universal within the
borders of my country.
Mr. Khashoggi’s was
not. Rudi Keller writes
a column entitled Rude
Awakenings. From a
recent article:
…The only bias I have
ever found that is universal
among good journalists
is a bias in favor
of the truth.
Mr. Khashoggi shared
this bias; that truth
is worth sharing. His
views so angered leaders
in the country of
his birth that an elaborate
plan to silence his
voice was planned and
executed resulting in
his death. I am Jamal
Khashoggi because I
too believe that truth is
worth sharing.
The United States attempts
to export to the
world the concept that
people should have the
right to express their
political and personal
opinions without fear
of governmental reprisal.
Alas, this is not a
universal truth accepted
by all. In the middle
east and China, the
right to free speech is
far from universally accepted.
If anything, it
is occasionally tolerated
but usually quashed.
The United States attempts to export to the
world the concept that people should have
the right to express their political and personal
opinions without fear of governmental
reprisal.
I am Jamal Khashoggi because we shared
the belief that truth shared is a positive
event.
It matters not if you
agree with my truth; we
believe that we have
the right to express it.
I am Jamal Khashoggi
because I believe in free
speech.
The purveyors or his
death, by smashing the
stone, have broken it
into a thousand pieces
each with a new story
to tell, a new truth to
share.
On the home page of
the Washington Post
you’ll see the tag line
“Democracy Dies in
Darkness”.
Thank you, Mr.
Khashoggi, for bringing
light to darkness, for
advancing democracy,
for standing in for truth,
for binding tyranny with
bold action with your
voice and with your
pen.
MULTIFAMILY
INSIGHT MAGAZINE
SUBSCRIBE
I am Jamal Khashoggi
because we shared the
belief that truth shared
is a positive event.
-17-

Multifamily Insight Magazine
Book Deal- Two for $19.95
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-18-

The Back Cover...
Multifamily
Cash Buyer
Major U.S. Markets
100+ Units
$10,000,000+
Read John’s books
for FREE on Amazon
Kindle! Click here.
-19-