Underwrite Deals in Your Own Model w/ Shortcut AI

We're using shortcut AI to underwrite a new deal in our existing Excel model, our Pro forma.

Not another interface, not another tool.

This is our Excel model and we are going to use shortcut in it.

All right?

So at the top, right, we're going to use our shortcut Excel plugin, very easy to upload.

I'm already logged in here and you'll see it's a similar type of, interface that ChatGPT or Claude or any of these other large language models have.

what I am going to do is I'm going to take this deal, this om that Taylor Avakian had sent to us.

I'm going to attach it, okay?

And then I'm going to go to my AI girlfriend.

Claude and I already created a prompt, okay?

And I'm going to throw it in there.

It's pretty simple, but we want to perform a comprehensive underwriting analysis for the multi family property, etc.

Here's the critical instructions.

We want to use my existing Excel structure.

We want to populate the model with verified market data, replacing broker assumptions where incorrect.

And we do not want to create a new model.

We want to work within my existing framework.

So the use case here is that we're going to utilize the shortcut to, underwrite using our own model.

And if you guys have been following along, you know that I really, really appreciate the tools that integrate pretty seamlessly with our existing workflows.

If you're an institutional shop, if you're any type of shop and you have a model just as this one, you see here, you don't want to abandon it, you want to use it, right?

You're comfortable with it.

You know it inside and out.

It's what you've done.

We're stubborn in our ways, we don't like change.

And so what shortcut's so brilliant at and index, you could see I both have that, at the top here.

But they're so brilliant because they integrate seamlessly with our existing workflows.

So now watch us underwrite this deal.

We're going to hit send.

Let's watch shortcut go to work here.

And I haven't done this specific use case yet.

so we're going to give it a go and see what it's all about.

I have pretty high expectations, so I'm hopeful that it nails it.

Okay?

And what's great about shortcut too is you have a prompt library.

Okay?

So what I think these tools do is they level the playing field, okay?

They level the playing field.

And I just want to check something here.

Where's my om?

So it's analyzing it.

Okay.

So it levels the playing field.

What I mean by that is, let's say, right?

So on a deal like this, this is pretty comprehensive stuff.

You know, underwriting a multifamily deal in la, it's no easy task, right?

But, having shortcut or index or this Excel super agent at your disposal allows anybody to underwrite this type of deal.

Okay, There's a prompt library here.

So that exact prompt we could store in our library.

And then you could have your assistant, your View VA or whoever it might be, someone from your team who's maybe not the best underwriter.

They could take a stab at this.

They just input that prompt with the new om and bang.

Shortcut underwrites the deal for you.

Now you need to be there for quality control.

Okay.

That'll never change.

Right.

Anytime you delegate tasks or things to another quality is, is, is something that needs to be thought of and considered.

but it levels the playing field.

The barriers to entry are less.

Okay, I could do this type of work for self storage, for retail, for multi, for industrial, for land, whatever it might be.

Okay.

I don't need to be an expert in underwriting.

Instead, I just need to know the prompts and then I need to know how to direct shortcut and index and these AI tools to do what they do best.

So we'll report back shortly.

It looks like it's just studying the offering memorandum.

and, I'll report back with some thoughts shortly.

So we're cranking.

So now it's going to start searching the web to verify market rents, operating expenses and comparables.

Watch this thing go.

This is just nuts.

so now it is updating a lot of our information.

As you can see here.

Bang.

It's making lots and lots of changes.

We are getting some error messages, but I would think that it's going to fix all those for us momentarily.

It looks like it's updating the unit mix with 12 studios and 41 beds.

Let's take a look.

Bang.

There it goes.

Wonderful.

can figure this out.

It looks like it's trying to add gas, trash, and so it's reading this detailed utilities this detailed expenses sheet.

But now it looks like it figured out that it could only update utilities and it Looks like it's updating all of our growth assumptions here, which is pretty cool.

We are getting these error notifications quite a bit.

I'm not sure what that is.

Now it's updating our exit cap to 6.

Yeah, there's that error.

So Excel found a problem with one or more formula references in this worksheet.

Check the cell references, neighbor links to other workbooks and your formulas are all correct.

Yeah, I'm not sure what that is.

if you hit okay.

It just moves.

So yeah, it's interesting.

So it's showing that our, our IRR has a value error.

So now it's going to look to see what the issue.

I see the issue.

The equity Multiple is showing 0.61.

Whoops.

Which indicates negative returns at the asking price.

This confirms that we need to analyze the property.

So now it's running scenarios at different purchase prices.

It's created this analysis summary for us here, which I guess it's intending to Show U.S.

broker versus the verified assumptions in a comparison table.

Interesting.

Here we go.

So it's building all that out for us.

So we got this pretty beefy analysis it's doing on a separate tab here.

And so it's showing us broker versus verified.

Look at all these strengths and weaknesses it's identified.

Wow, this is awesome.

Strong Silver Lake location, major Systems renovated in 2020.

Multiple units with huge upside to market.

And then we have lots of weaknesses and risks.

Rent control, 1916 building insurance costs likely understated and rising rapidly.

No parking limits.

Tenant pool renovation cost estimated at 15 to 20k per unit.

Value add strategy.

That's awesome.

So it's conclusion.

So its conclusion is do not proceed at asking price of 3.1 million.

It recommends submitting an offer at 2.75 million with thorough due diligence contingencies.

Wow, look at this formatting and everything I put together here looks pretty good.

It's got some sales comparables here, market rent comparables.

Now it's testing different scenarios at different purchase prices.

But we're still getting this value error here and I want to see if it picks up on that again.

Now it's trying 2.2 million.

You know, it's interesting because they may have changed our formulas up here.

They may have changed our formulas.

so that's not great.

Yeah, I think did something to our formulas.

We should get a positive IRR and equity multiple.

Especially I mean, if our average cash on cash is 8% what purchase price?

That's 3.

Yeah, I think it did something to our.

Our returns.

I mean, it.

Look, it did a great job with all this.

Let's scooch that over.

And you can see, like, now it's giving us an executive summary.

I mean, the way this all gets formatted and done is like, insane.

Look how ridiculous this is.

Look at this property represents a value trap, not a value add opportunity.

This is such a detailed analysis on top of our actual model.

So now it looks like it's building a.

Building something.

Where is that?

It's building a detailed rent roll analysis.

There it is.

So it just built this detailed rent analysis for us, which is pretty cool.

And it looks like it's making this analysis summary the main sheet.

So it's showing current and then market rents and then monthly upside priority of turning units.

Pretty remarkable, actually.

so it's definitely not perfect with our actual underwriting model with that use case.

I mean, that was a pretty complicated thing to do, right?

Take an om.

go verify all the assumptions, figure out how to use our model, input all of those assumptions into the right locations.

I mean, look, this model is like, really, really robust and comprehensive.

So the fact that it got this far, I think is impressive.

Now I just want to see why.

I think there's an error.

And that error keeps popping up, too.

That's kind of annoying.

I think there's an error with the IRR and equity multiple return calculations.

Can you please try and figure this out?

I.

I think we should have a positive IRR and equity multiple.

And it appears the formula or calculation is now incorrect.

Let's see what happens with that.

And here's our fully kind of comprehensive summary, final recommendations.

I mean, it says, do not proceed at any price.

This property represents a value trap.

Maybe I am wrong.

And let's just see what it kind of does here.

I hate that error thing that keeps popping up.

That's really annoying.

So now it's going to investigate this calculation here.

Let's see what we can find out.

So it looks like it may have found the error here.

Oh, my God.

Look, it fixed it.

That's unreal.

Okay, so that's what I thought.

So now all of our returns makes sense.

Okay.

All right.

So yeah, we need.

There needs to be a little babysitting in this scenario.

And that.

That's fine.

Okay.

But, now it needs to update, everything and look again.

That's okay.

I wonder Why?

I wonder if it changed our formulas for that.

or what exactly happened.

But like now, now we got something here.

So I'm glad it was able to figure that out.

average cash on cash, five and a half percent.

I mean that, that makes sense.

spread between your untrended yield on cost and exit cap, less than 100bps.

Not great.

18 gross levered IRR feeling, is maybe that's low.

and let's just see what else our rents.

I mean it, look, it says it verified all of that.

Our expenses were at 36%.

Yeah.

So that, that's probably the issue or the expenses.

It's This is honestly so amazing like how it does this.

I mean having a co pilot like this is just so insane.

I mean these expenses need to be a lot higher.

So I, I, what I would say is that it kind of missed on that research.

This is a 1916 building.

We need to be closer to like 45.

And then I think like repairs and maintenance for 1916 building should not be 500 per unit per year.

Like I mean I think a thousands, like a lot closer to that.

And you'll see that the returns kind of reflect that we're still only at 39.

Let's just see payroll.

Like that's fine.

It's a 16 unit building.

General admin.

Fine utilities.

That seems really low.

So I don't know what's going on with that insurance.

I mean probably even like 1500.

honestly, 1500 per unit minimum LA, like 1916 building.

Come on, seriously.

So now we're starting to get into And that's why like this, this, you know, is it going to replace the analyst?

No, like, you know, the analyst is there for exactly what I'm doing right now.

Okay.

And that's quality control.

but actually building this out, taking a first stab at it, we didn't have to sit here and watch this.

You know, we could have been doing other stuff.

So I think that's what's so brilliant about this.

Right?

Like maybe the 10 to 15 minutes I spend doing quality control, you know, that allows me to underwrite a lot more deals versus having to do data entry and all this garbage and initial, initial research.

Right.

A lot of that could be done with the AI, which I think is so cool.

But it definitely missed on some assumptions here.

that's fine.

I mean, look, even 41, I'm, this should be a 5% management fee on a small building like that.

utilities.

I just can't see how it's only 650, but maybe we're getting real numbers.

Make ready contract services, all that's fine.

Property taxes appear to be right.

Capital reserves, come on.

350 a unit minimum.

Like let's be honest.

And then is our exit cap really a six on a 1916 building here?

No, probably make that six and a quarter.

So now our returns are kind of more in line.

So that's at the, the listing price, right?

So like, where does this deal get done?

Maybe there, maybe not.

But so anyways, it's updated everything here.

It's updated its full analysis summary.

Proceed.

with due diligence, property shows strong returns.

Boom.

Boom.

Wow.

Look at like this level of detail is so insane.

So human judgment, quality control.

More of the story here, guys.

We're not quite there yet.

With fully underwriting.

We're close.

Not quite there yet.

I'm going to do probably the same exact demo using Index and I will compare the results and see which one is doing a better job.

so excited to do that.

This was a fun one.

I certainly learned a lot.

And I learned that this Excel agent is absolutely brilliant and can be utilized in such efficient and strategic ways.

You cannot, rely on it to underwrite deals utilizing your model without oversight, direction and quality control.

That's sort of the moral of the story here.

But the way that it's created these formulas and does its homework and research, and then builds a separate tab to do comparison and a full analysis summary and formats it and just, it's so brilliant and just wicked, wicked intelligent.

there is no analyst who could perform, at the abilities of these Excel agents.

There is none whatsoever.

So super, super excited to be, you know, working with Shortcut, to be working with NDEX as it relates to real estate, to making them better.

giving real time feedback, getting you guys all access to this stuff, it's just so awesome.

So I'll be doing a demo, sort of demo with NDEX just shortly.

and I hope you guys enjoyed this.

Let me know if you have questions.

I'm going to keep doing different use cases with shortcut index just to see like where it performs better.

but using your own model template, which in this case mine is crazy robust.

If mine was a lot simpler, it'd probably do a lot better job, I think shortcut.

But because this is so robust and complicated, which again, I mean, like, look at.

Let me just show you guys, like look how insane this model is, I mean, like, all these different cash flows and stuff.

It is so complicated.

So, I mean.

And it goes forever to look at all this.

This is insane.

So the fact that Shortcut was able to work within that model, as it just did, I think is so impressive.

So we're close.

We, are close, guys.

We're very close.

But we're still needed for quality control and judgment.

I don't think that'll ever go away.

And so the best analysts, in my opinion, are going to be the ones who could effectively use these tools and multiply how many deals they could underwrite.

So we're going to figure out how promise.