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Episode 189: How To Underwrite Chicago Multifamily Buildings with Essex Director Rick Ofman

Rick Ofman has over six years of experience in commercial real estate and is a Director at Essex Realty Group.

Rick kicks things off by defining underwriting and associated terminology. He provides a thorough breakdown of income, expenses, and necessary assumptions. Rick shares insight on forecasting variables such as rehab costs, rent increases, and tax increases to name a few. He explains some valuation terms such as gross rent multiplier (GRM) and cap rate and the impact that interest rates have on these metrics. Rick closes with a bullish outlook on projected rent growth in Chicago and emphasizes the importance of teaming up with a broker that is transparent and has your best interest in mind! 

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04:40 Housing Provider Tip: Consider hiring a process server to best utilize your time!

07:34 Intro to our guest, Rick Ofman!

09:24 What is the definition of underwriting? 

10:54 Rick discusses making assumptions and explains other variables during underwriting!

19:54 How are expenses underwritten?

23:18 What are some additional underwriting considerations when evaluating C/D class properties?

23:57 Rick explains “hard” and “soft” costs!

32:37 How can buyers accurately determine utility costs? 

34:34 What is the next step in underwriting after determining income and expenses?

46:09 How have rental “seasons” varied over recent years in Chicago? 

50:02 How is Rick forecasting expense increases for buyers/owners?

52:42 What is Rick’s competitive advantage? 

54:02 One piece of advice for new investors.

54:26 What do you do for fun?

54:34 Good book, podcast, or self development activity that you would recommend? 

55:30 Local Network Recommendation?

55:50 How can the listeners learn more about you and provide value to you?

That’s our show! Thanks for listening!


Guest Name: Rick Ofman

Guest Company: Essex Realty Group

Guest Link:

Other Links for show notes:

And Then We Had Kids (Podcast Recommendation)

Matt Cohen (Network Recommendation)