For apartment acquisitions
Multifamily underwriting software
I underwrite apartments as a per-unit business. Count the units, take the average rent, take out vacancy, pay the expenses, and what is left is NOI. The loan is the next question. Does that NOI cover the payment.
What the software does
Underwrite runs that pass in one model. You enter the units, the rent, the vacancy, the operating costs, and the loan. The engine returns year 1 NOI, the going-in cap rate, project IRR, the equity multiple, minimum DSCR, and a verdict of PURSUE or PASS.
The return is computed by tested code. A language model can read an offering memorandum into the inputs. It does not compute the return. You can open any assumption and watch the plate move.
What a multifamily model has to hold
The useful first pass is short. Gross potential rent is units times monthly rent times 12. Vacancy comes off. Other income goes on. Operating expenses come off. That is NOI. Debt service is not an operating expense, so it is not inside NOI.
One average rent is a simplification. A real community has studios and larger homes, and the mix can shift. This model keeps a single average, on purpose, so the first pass stays checkable. The limit is written on the multifamily methodology page.
Worked example
Lakeshore Garden Apartments in Cleveland, OH is the gallery's multifamily case. It is 48 units at $2,200.00 a month, vacancy 5.00%, other income $60,000.00 in year 1, priced at $16,000,000. There is no retail income. The loan is 65% of price at 6.25%, and the hold is 7 years.
Every figure below is that case run through the engine. Vacancy and operating expenses print in parentheses, which is the engine's sign for a reduction.
The verdict is PASS. Project IRR is 12.14%. Minimum DSCR is 1.21x. PURSUE needs the IRR at or above the hurdle and minimum DSCR at or above 1.00x. This case does not clear both.
- Units
- 48
- Average rent
- $2,200.00 a month
- Residential gross potential rent
- $1,267,200.00
- Residential vacancy
- ($63,360.00)
- Other income
- $60,000.00
- Effective gross income
- $1,263,840.00
- Operating expenses
- ($335,149.60)
- Year 1 NOI
- $928,690.40
- Going-in cap rate
- 5.80%
- Exit cap
- 5.50%
- Loan amount
- $10,400,000
- Year 1 debt service
- $768,415.07
- Year 1 DSCR
- 1.21x
- Minimum DSCR
- 1.21x
- Project IRR
- 12.14%
- Equity multiple
- 2.1228x
- Verdict
- PASS
Frequently asked questions
What does this multifamily model include?
Units, average monthly rent, vacancy, other income, operating expenses, and the loan. On Lakeshore Garden Apartments, year 1 NOI is $928,690.40. The engine's verdict on that case is PASS.
Is the average rent a full unit mix?
No. The model uses one average rent per unit. A mix of floor plans is still one average on this pass. That limit is on the multifamily methodology page.
Can I try a deal with no card?
Yes. Cayuga Commons (Illustrative Case) opens with no sign-in. Your own deals are Underwrite Core, $49/month, and the first 30 days are free.
Does this replace a lender's underwriting?
No. It is a first pass you can check. A lender uses its own vacancy, expenses, and payment. These figures are the engine's, not a lender's approval.