Underwriting · 8 min read
How to Underwrite a Multifamily Deal in Under an Hour
A repeatable framework for quickly filtering multifamily real estate opportunities using the T-12, rent roll, and honest expense assumptions.
By Yuriy Blat ·
Most multifamily deals die on the spreadsheet — and that's a good thing. The faster you can separate the 5% of deals worth a serious look from the 95% that aren't, the more time you spend on real opportunities. Here's the underwriting framework I use to filter a multifamily deal in under an hour.
Start with the T-12, not the pro-forma
The trailing twelve months (T-12) of income and expenses tells you what the property has actually done. The seller's pro-forma tells you what a broker hopes it might do. Always underwrite from real, then stress-test the plan.
The five numbers that matter
- In-place NOI (net operating income) from the T-12
- Market rent vs in-place rent per unit
- Real expense ratio (typically 40–55% for stabilized multifamily)
- Debt service at today's rates, not last year's
- Exit cap rate 50–100 bps higher than today's going-in cap
Build the value-add case explicitly
If your business plan is 'raise rents,' you don't have a business plan. Break out where every dollar of upside comes from: interior renovations, expense reduction, occupancy recapture, ancillary income, and refinance timing. If any single lever accounts for more than 60% of your return, you're one wrong assumption from a bad deal.
"Deals are made or lost on the spreadsheet before a single unit is turned. If the numbers only work in the best case, the deal doesn't work."
The 30-minute filter
Before I open a full underwriting model, I run a napkin filter: purchase price ÷ unit count, in-place NOI ÷ price, and debt coverage at a realistic loan quote. If those three don't clear my minimums, the deal is out. It's not a substitute for real underwriting — it's a way to make sure real underwriting only happens on deals that deserve it.