Notes on multifamily.
What we read, underwrite, and argue about — written for investors who want the mechanics, not the marketing.
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How to read a rent roll without being told a story
A rent roll is a list of leases. It becomes a story when someone chooses which columns to show you.
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What NOI leaves out, and why that matters to you
Net operating income is the number that sets the price. Three real costs sit outside it, and all three are paid out of your money.
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The exit cap rate is the assumption that moves everything
One number decides most of the projected profit in a five year hold, and it describes a market nobody can see yet.
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What a capital call actually asks of you
The letter asks for more money. The agreement decides what happens if you say no, and that clause is usually signed years before anyone reads it.
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A preferred return is a queue position, not a yield
An eight percent pref does not mean the investment pays eight percent. It means eight percent is owed before anyone else shares in the profit.
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Deferred maintenance — the debt that never shows up on a balance sheet
Paint is cheap, and it is the first thing a seller buys. The work a building did not get has a date attached — and it rarely appears in the numbers you read first.
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Reading a waterfall before you agree to it
An eighty-twenty split almost never means eighty percent of the profit. It means eighty percent of one tier, and the tiers are where the money moves.
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LP and GP: who carries what when the plan slips
The split of the profit is the part everyone reads. The split of the obligation is the part that decides what happens in a bad year.
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One month of construction data is not a trend
Apartment starts fell by more than a fifth in August. Averaged over three months, the pace was roughly where it stood a year ago.
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The real cost of an empty unit is not one month of rent
A unit that sits empty for thirty days costs far more than thirty days of rent. The rest of the bill hides in make-ready, leasing and concessions.
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