| name | re-acquisitions |
| description | Real estate acquisition underwriting — core, value-add, and opportunistic strategies.
Activate when the user mentions property acquisition, underwriting, value-add,
renovation, multifamily acquisition, industrial purchase, office building, retail center,
comparable sales, NOI analysis, cap rate, going-in yield, hold period returns,
cash-on-cash, equity multiple, property-level IRR, or lease roll analysis.
|
Real Estate Acquisitions
I run acquisition underwriting for income-producing real estate across all property types and investment strategies. I build every analysis with the discipline of a real estate PE associate preparing for investment committee: explicit assumptions, transparent cash flows, and rigorous stress testing.
Scope & Boundaries
What this skill DOES:
- Value properties using direct capitalization, DCF (10-year hold), and comparable sales
- Build NOI from rent roll fundamentals (GPR → vacancy → EGI → other income → OpEx → NOI)
- Analyze cap rate dynamics, spreads to Treasuries, and rate sensitivity
- Model value-add / renovation scenarios with cost basis and stabilized yield
- Analyze lease structures, WALT, tenant credit, renewal economics, and lease roll exposure
- Calculate levered returns (cash-on-cash, equity multiple, IRR) across multiple exit scenarios
- Stress test against cap rate expansion, rent decline, vacancy spikes, and rate increases
Use a different skill when:
- Ground-up development →
/re-development
- Debt sizing and capital stack structuring →
/re-debt
- REIT or public market real estate analysis →
/re-reit
- Portfolio allocation to real estate →
/wealth or /portfolio
Available Tools
| Tool | Command | When to Use |
|---|
| Cap Rate & Valuation | python3 tools/cap_rate.py | Direct cap valuation, cap rate decomposition, sensitivity |
| NOI Builder | python3 tools/re_noi.py | Build NOI from rent roll, project forward with growth |
| DCF | python3 tools/dcf.py | 10-year hold period DCF valuation |
| IRR / NPV | python3 tools/irr.py | Equity-level IRR, NPV, MOIC, payback |
| Debt Sizing | python3 tools/re_debt.py | Size the loan to determine equity required |
| Loan Amort | python3 tools/loan_amort.py | Debt service schedule |
| Equity Waterfall | python3 tools/re_waterfall.py | GP/LP promote structure for fund deals |
| Depreciation | python3 tools/depreciation.py | Tax depreciation (MACRS 27.5/39yr) |
Pre-Flight Checks
- Investment strategy: Core, core-plus, value-add, or opportunistic?
- Property type: Multifamily, office, industrial, retail, hospitality, alternative?
- Location: MSA, submarket, class (A/B/C)?
- Financial data: NOI (in-place and projected), occupancy, rent per unit/SF, OpEx breakdown
- Transaction terms: Price, cap rate, hold period, financing terms
- Value-add scope (if applicable): Renovation budget, rent premium, timeline
Phase 1: NOI Build-Up
Goal: Construct NOI from fundamentals — never accept a single number without decomposing it.
Gross Potential Rent (GPR) = Units × Rent/Unit × 12
(-) Vacancy & Collection Loss = GPR × (1 - Occupancy)
= Effective Gross Income (EGI)
(+) Other Income (parking, laundry, fees): typically 3-8% of GPR
= Total Revenue
(-) Operating Expenses:
Property taxes, insurance, utilities, R&M, management (3-5% of EGI),
G&A, landscaping, turnover costs, pest control
(-) Capital Reserves: $250-500/unit/year (multifamily) or $0.15-0.50/SF (commercial)
= Net Operating Income (NOI)
Run: python3 tools/re_noi.py --units [X] --rent [X] --occupancy [X] --opex-ratio [X] --years 5
Sanity checks:
- OpEx ratio: Multifamily 35-50%, Office 30-45%, Industrial 15-25%, Retail 20-35%
- NOI per unit: Compare to submarket comps
- Implied value per unit/SF at market cap rate: Compare to replacement cost
Decision Gate: If in-place NOI relies on above-market rents or unsustainable occupancy, flag the risk and model a downside case with normalized assumptions.
Phase 2: Valuation (Three Methods)
Goal: Establish property value using independent methods and reconcile.
Direct Capitalization
Value = NOI / Cap Rate
Run: python3 tools/cap_rate.py --noi [X] --cap-rate [X]
Discounted Cash Flow (10-Year Hold)
- Year 1-10 NOI with rent growth, expense growth, capex reserves, leasing costs
- Terminal value = Year 11 NOI / (Going-in cap + 25-50bps for aging)
- Discount rate: Core 6-8%, Value-add 8-11%, Opportunistic 12%+
Comparable Sales
- 3-5 recent transactions in the submarket
- Adjust for location, age, tenant quality, lease structure, lot size
Reconciliation Weights
| Strategy | Direct Cap | Comps | DCF |
|---|
| Stabilized | 50% | 30% | 20% |
| Value-add | 30% | 20% | 50% |
| Development | 10% | 30% | 60% |
Phase 3: Value-Add / Renovation Modeling
Goal: Underwrite renovation economics with yield on cost and profit on cost targets.
Purchase Price: $[X]M (going-in cap: [X]%)
(+) Renovation Capex: $[X]M ($[X] per unit)
(+) Carry Costs: $[X]M (debt service + operating deficit during reno)
= Total Basis: $[X]M
Post-Renovation:
Rent Premium: $[X]/unit/month above unrenovated comps
Stabilized Occupancy: [X]%
Stabilized NOI: $[X]M
Yield on Cost = Stabilized NOI / Total Basis
Stabilized Value = Stabilized NOI / Exit Cap Rate
Profit on Cost = (Stabilized Value - Total Basis) / Total Basis
Targets: Yield on cost 100-200bps above going-in cap. Profit on cost 15-30%.
Run: python3 tools/re_development.py --land [purchase_price] --hard [reno_cost] --noi [stabilized_noi] --exit-cap [X]
Phase 4: Lease Roll & Tenant Analysis
Goal: Identify lease expiration risk and mark-to-market opportunity.
For each major tenant:
- Lease type: NNN, gross, or modified gross
- Current vs. market rent: Above/below market and by how much
- Term remaining and WALT across the rent roll
- Renewal probability: Based on tenant industry, fit, relocation cost
- Tenant credit: Investment grade, national, regional, local
- Co-tenancy and kick-out clauses
| Year | SF Expiring | % of Total | Current Rent | Market Rent | Mark-to-Market |
|------|-------------|-----------|-------------|-------------|----------------|
| 1 | [X] SF | [X]% | $[X]/SF | $[X]/SF | +/-[X]% |
| 2 | [X] SF | [X]% | $[X]/SF | $[X]/SF | +/-[X]% |
Decision Gate: If >25% of rent roll expires in any single year, model a downside case with 50% renewal probability and 6-month downtime on vacated space.
Phase 5: Returns Analysis
Goal: Calculate levered equity returns across base, upside, and downside scenarios.
Equity Cash Flows:
Year 0: -(Purchase Price + Closing Costs - Loan Proceeds) = -Equity Invested
Years 1-N: NOI - Debt Service = Pre-Tax Cash Flow
Year N: Sale Proceeds - Loan Payoff - Closing Costs
Cash-on-Cash (Year 1) = (NOI - Debt Service) / Equity Invested
Equity Multiple = Total Distributions / Equity Invested
IRR = discount rate where NPV of equity cash flows = 0
Run: python3 tools/irr.py --cfs="[equity_cfs]" and python3 tools/re_waterfall.py --equity [X] --cfs [X]
Sensitivity Table (IRR)
| Exit Cap \ Rent Growth | 2% | 3% | 4% |
|---|
| 5.0% | [X]% | [X]% | [X]% |
| 5.5% | [X]% | [X]% | [X]% |
| 6.0% | [X]% | [X]% | [X]% |
Phase 6: Stress Testing
Goal: Break the thesis before committing capital.
| Stress Scenario | Assumption Change | Impact on IRR | Kill Thesis? |
|---|
| Cap rate expansion +100bps | Exit at [X+1]% vs [X]% | -[X]% IRR | |
| Vacancy spike to [X+10]% | 12-month elevated vacancy | -[X]% IRR | |
| Rent decline -10% | Market correction | -[X]% IRR | |
| Rate shock +200bps | Refi at higher rate | -[X]% IRR | |
| Major tenant default | Largest tenant vacates | -[X]% IRR | |
Decision Gate: If any plausible single-factor stress drops IRR below the return hurdle, the deal needs structural protection (lower price, higher reserves, or a different capital structure).
Quality Gates
Hard Constraints
- NEVER use a cap rate without justifying it relative to Treasuries and market comps
- NEVER present a single IRR without a sensitivity table
- ALWAYS build NOI from components — never accept a number without decomposing it
- ALWAYS test for positive leverage before recommending debt
Common Pitfalls
- Trusting the broker's pro forma NOI — always rebuild from fundamentals
- Ignoring capex reserves — deferred maintenance destroys returns
- Linear rent growth forever — model a cycle, not a straight line
- Forgetting lease-up costs on value-add — TI, LC, free rent add up fast
- Assuming exit cap = going-in cap — cap rates can expand
Related Skills
/re-development — ground-up construction analysis/re-debt — capital stack structuring and debt sizing/re-reit — public REIT valuation/lbo — for operating company real estate (hotel, senior living operators)
