Strong Market Fundamentals
Every deal starts with the market.
Look for:
- Population growth
- Job growth
- Diverse economy
- Rising rents
A bad market can ruin a good deal.
In-Place vs. Potential Performance
A good deal has a clear gap between:
- Current performance (in-place income)
- Future performance (after improvements)
This gap represents your opportunity.
Realistic Rent Upside
Overestimating rent growth is a common mistake.
A strong deal:
- Uses comparable properties (comps)
- Has proven rent ceilings
- Avoids unrealistic projections
Conservative Underwriting
Discipline is more important than optimism.
Look for:
- Realistic expense assumptions
- Vacancy buffers
- Interest rate sensitivity
- Exit cap rate expansion
Good deals survive worst-case scenarios.
Clear Business Plan
Every strong deal answers:
- What are we improving?
- How long will it take?
- What will it cost?
- What are the expected returns?
If the plan is vague, the deal is weak.
Experienced Execution Team
Even the best deal fails without execution.
You want:
- Proven operators
- Strong property management
- Clear investor communication
Alignment of Interests
A good deal aligns sponsors and investors.
Look for:
- Preferred return (e.g., 8%)
- Sponsor co-investment
- Transparent fee structure
Margin of Safety
Great deals build in protection:
- Buying below replacement cost
- Value-add buffer
- Multiple exit strategies
Final Thoughts
A good multifamily deal isn’t the one with the highest projected return.
It’s the one most likely to deliver predictable, consistent results.
