How do you underwrite a multifamily acquisition?

Start with a market filter to eliminate bad locations before opening a rent roll. Then evaluate deal size and structure, analyze the rent roll for occupancy gaps and lease cliffs, stress test the NOI with 15% higher expenses, calculate whether asking price is supported by actual NOI, and apply a 72-hour cooling period before submitting any offer.

What is the biggest reason multifamily deals fail underwriting?

The gap between asking price and NOI-supported price. Across 195 deals underwritten in one year, the most common failure point was a 35-40% gap between what sellers wanted and what the numbers actually supported. When the gap exceeds 35%, it means even aggressive value-add assumptions cannot bridge to a viable return.

What should a multifamily pre-offer checklist include?

A thorough pre-offer checklist should include market screening questions, deal structure filters, rent roll analysis covering physical vs economic occupancy and delinquency aging, an NOI stress test assuming 15% expense overruns, a math gate comparing NOI-supported price to asking price, and a mandatory 72-hour waiting period before submitting the offer.

The Pre-Offer Checklist That Killed 195 Deals and Saved Every Dollar of LP Capital

Six gates. 195 deals underwritten. Zero purchased. The exact filter used across 48 properties. Free.

Why 195 Deals Failed the Same Gate

One year of deal flow. 195 multifamily acquisition opportunities underwritten across North Carolina, Tennessee, and Denver. Zero purchased. The pattern was the same almost every time: a 35-40% gap between what the seller wanted and what the numbers actually supported.

Brokers sent deals priced on pro forma rents that assumed 95% occupancy, zero concessions, and expense ratios from 2019. When you re-underwrote with trailing-twelve actuals, the NOI-supported price landed 35% or more below asking.

Gate 1: Market Filter

Five questions that eliminate bad markets before you spend a minute on the rent roll. Population trend, job growth concentration, rent-to-income ratio, new supply pipeline, and comparable transactions in the last 12 months. If a market fails three of the five, stop.

Gate 2: Deal Size and Structure

Filters out deals that waste analyst time. Unit count minimums, seller motivation signals, and deal structure alignment. A seller who is "testing the market" is not selling. Move on.

Gate 3: Rent Roll Analysis

Physical occupancy vs economic occupancy. Lease expiration cliffs that concentrate turnover in a single quarter. Delinquency aging by 30/60/90 buckets. A property at 95% physical occupancy and 82% economic occupancy has a collections problem hiding behind an occupancy number.

Gate 4: NOI Stress Test

If expenses came in 15% higher, does it still cash flow? Insurance doubled across the Sun Belt in 2024. Property tax reassessments hit 18 months after close. Capital reserves at $275 per unit per year minimum. If the seller is running $0 reserves, the deferred maintenance is hiding somewhere.

Gate 5: The Math Gate

Where 195 deals died. Calculate NOI-supported price vs asking price. If the gap exceeds 35%, automatic pass. No creative structuring, no seller financing assumptions. A 35% gap means the seller is living in a different market than you are.

Gate 6: The 72-Hour Rule

Never submit an offer the same day you finish underwriting. Sleep on it. Re-run worst-case assumptions. Second set of eyes. Deal fever is real. The deals that still look good on Thursday morning are the ones worth pursuing.

Who This Is For

Multifamily operators evaluating acquisition targets who want a repeatable filter before spending time on full underwriting. Asset managers building acquisition pipelines who need a fast screen. LPs evaluating GP discipline by seeing whether their operator uses a structured gate system or underwrites on instinct.