What this guide helps you evaluate
Investors screening or underwriting apartment and multifamily acquisitions.
This page is designed to help you compare the moving parts, organize due diligence and ask better questions before you commit money, sign a contract or change an operating process.
What to compare first
- Rent roll, concessions, vacancy and bad debt
- Other income and normalized operating expenses
- Net operating income and cap rate
- Debt service, DSCR and leverage
- Renovation, rent-growth, exit cap and sale-cost assumptions
Step-by-step process
- 01
Reconcile the rent roll with trailing financial statements and bank or property-manager data.
- 02
Normalize taxes, insurance, utilities, payroll, repairs and management fees.
- 03
Calculate current NOI before adding value-add assumptions.
- 04
Model debt with actual lender terms and interest-rate sensitivity.
- 05
Run downside cases for occupancy, expenses, rent growth and exit cap rate.
Common mistakes and risk checks
- Underwriting to pro forma rents without a transition timeline.
- Using seller expenses that omit market-rate management or reserves.
- Relying on one exit cap assumption.