Investor Underwriting in San Diego: Conservative Assumptions That Prevent Bad Deals
Most bad deals look great on a spreadsheet that assumes perfection. Conservative underwriting is how real investors stay alive when the market stops being cute.
The fast answer
Use ranges, not single numbers. Assume delays. Stress test the downside. Then structure terms to protect your exit.
- Rehab: low/base/high range
- Rent: conservative comps + vacancy reality
- Exit: realistic time + realistic price
The biggest mistake: single-number thinking
If your deal only works with perfect rehab, perfect rent, and perfect timing, it does not work. It is a bet.
- Replace 'best case' with 'most likely'
- Add buffers for surprises
- Track your assumptions in writing
Rehab budgeting: ranges and triggers
Rehab is where spreadsheets lie the most. Build ranges and define what pushes you from low to high.
- Low: cosmetic only
- Base: cosmetic + minor systems
- High: systems, permits, unknowns
Rent assumptions: conservative comps win
Do not underwrite to the highest rent you saw online. Underwrite to what a real tenant will sign today, with vacancy and concessions accounted for.
- Use comparable rentals, not fantasy asks
- Assume vacancy/turnover costs
- Account for property-specific drawbacks
Downside framing: what breaks the deal?
The real skill is identifying failure modes before you buy them.
- Title/disclosure risk
- Access/occupancy risk
- Financing/timing risk
- Permit/scope creep risk
Terms that reduce risk
Good terms are a profit center. Clarity reduces friction and protects your exit.
- Clear contingency structure and deadlines
- Proof of funds and financing posture up front
- Timeline discipline that matches the asset reality
Common questions
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