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Opportunity Ratio:

Updated: Mar 4, 2020

The single most comprehensive metric for quantifying the profitability in multifamily property acquisitions is the “Opportunity RatioTM ”.

 

At REVIVA, we approach the Value Identification process with significant analytical rigor. Because our asset selection decisions are strongly influenced by statistical evidence, our underwriting model calculates a large array of metrics.

 

In constructing our analytical system, an evaluation of a myriad of statistical measures were considered for inclusion into our decision report. Many of these ratios are the standard fare relative value criteria utilized by the industry in general.

We found that these analytics are very helpful but somehow seemed to fall short of that elusive “One” number which can summarize and crystallize the real economic opportunity.

 

Then in one particularly memorable conference call discussing inclusion and the prioritization of these statistical value metrics, we discovered a new statistic. The one that was missing from the typical list that underwriters routinely reference.

We call it the Opportunity RatioTM.

 

Unlike most statistics, the Opportunity RatioTM captures real economic value, the realistic likelihood of profit. Rather than just a relative measure against the comps, the Opportunity RatioTM clarifies and quantifies the realizable profitability of an acquisition. If you are curious to see a real-time example of a REVIVA Executive Summary for LPs, click here.

 

Our approach to the multifamily marketplace is heavily influenced by our unique, deep experience in structured real estate and complex credit stack analytics. It is this perspective which we built into our models that provides our analysis with a decisive edge for successful wealth building for our investors.

 

The Opportunity RatioTM could possibly be the single most important and easiest to implement measurement (Occam’s Razor) in the successful deployment of capital in the arena of multifamily investing. Connect with REVIVA.


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