Financial analysis is a critical aspect of asset management because that is where the data comes from, and today’s guest is an absolute whizz when it comes to this side of the business. With a past life in tech, Prashant Satoskar is a skilled systems thinker, and his real estate career has seen him invest in single-family, and more recently become an LP and GP in the multifamily space as well. Today he is a managing partner of Catalyst Equity Partners which has 700 doors under management. In this episode, Prashant drills down on his policy for financial analysis, getting into some of the hidden, below the line costs involved in asset management. For Prashant, his analysis starts top-down, going from NOI and occupancy collection and ending up on cash flow. Along the way, Prashant keeps an eye on things like P&R, R&M, cash flow statements, AP aging statements, and balance sheets, as well as ROI on marketing and traffic, all of which he mentions today. He also talks about some of the apps and platforms he uses to help him track and log this data. From there, we talk about Prashant’s gift for big picture thinking and understanding the nuances and moving pieces involved in real estate. For all this and more on the topic of financial analysis from today’s great guest, tune in today.
Key Points From This Episode:
- Prashant’s background in tech and transition from single into multifamily real estate.
- KPIs in Prashant’s financial analysis, from occupancy collection and NOI to P&R, R&M, and cash flow.
- You can think your NOI is great but it actually isn’t because of missed hidden costs.
- Getting to grips with cash flow by looking at cash flow statements, AP aging statements, balance sheets, etc.
- Lessons Prashant learned as a passive investor about the hidden costs of assent management.
- Other hidden KPIs to look out for as far as ROI on marketing and traffic.
- Prashant’s use of ResMan and Excel and his plans for further future optimization.
- Understand the moving parts of asset management: Prashant’s superpower gleaned from his tech career.
“You can have a great NOI but if there is stuff below the line in your books that eats into all of that cash that you generated then your cash flow can be zero.” — Prashant Satoskar [0:04:28]
“We start top-down and dig deeper into these various aspects of the financials to truly understand what is our financial position.” — Prashant Satoskar [0:05:18]
“In my past life really I was used to dealing with various functions within the company like marketing, sales, consulting, operations and how all of these things tie together and asset management is really the same thing.” — Prashant Satoskar [0:09:21]
Links Mentioned in Today’s Episode: