How to Analyze a 48-Unit Apartment Deal in Under 10 Minutes

Overview

Analyzing a 48-unit apartment deal used to take experienced underwriters one to two weeks of spreadsheet work. With AI-powered underwriting tools, the same institutional-grade analysis now takes minutes. This guide walks through a complete deal analysis using real-world numbers, showing you exactly what to evaluate and what the key decision points are.

The Deal

You receive an offering memorandum from a broker for a 48-unit apartment complex in a growing Texas submarket:

Step 1: Verify the Income (Don't Trust the Broker's Numbers)

Start with the rent roll, not the broker's pro forma. The rent roll reveals what's actually happening unit by unit.

Rent Roll Analysis:

The rent roll shows 24 two-bedroom units averaging $925/month and 24 three-bedroom units averaging $1,045/month. Three units are vacant, and two occupied units have month-to-month leases with tenants paying $150 below market. Gross potential rent at current lease rates is $567,360 annually.

Market rent comparison using comparable properties within a 3-mile radius: two-bedroom units rent for $975 to $1,050, and three-bedroom units rent for $1,100 to $1,175. Your property's rents are 5% to 8% below market on average — that's potential upside of approximately $50,000 to $70,000 in annual income if rents are brought to market over 12 to 18 months.

Income Calculation:

Notice we're using a 6% vacancy assumption even though current occupancy is 94% (6% vacant). This accounts for turnover and economic vacancy, not just physical vacancy. Also notice the broker's OM may have used lower vacancy to inflate the numbers.

Step 2: Scrutinize the Expenses

Pull the T-12 and analyze each expense line against market benchmarks.

Two critical adjustments needed:

Property tax reassessment: The current owner bought the property years ago at a lower basis. Texas will reassess at your purchase price. If the current assessment is based on a $3.2M value and you're buying at $4.8M, property taxes could increase from $62,400 to $93,600 — a $31,200 annual hit.

Repairs & maintenance at $450/unit is far too low for a 1998-built property with 48 units. Market benchmark for this age and class is $800 to $1,200/unit. Adjust to $1,000/unit ($48,000 annually). The seller likely deferred maintenance ahead of the sale.

Adjusted expenses: Add $31,200 for tax reassessment, add $26,400 for realistic repairs, and add $18,000 for capital reserves ($375/unit). Total adjusted operating expenses: $294,528, which is $46,600 more than the broker's numbers.

Step 3: Calculate the Real NOI

The broker showed $312,000 NOI. Your in-place NOI is closer to $273,684 after adjusting expenses. Even with market rent upside, stabilized NOI is approximately $309,684. This $38,000 gap represents nearly $700,000 in value at a 5.5% cap rate.

Step 4: Model the Financing

Compare agency financing options:

Problem identified: In-place NOI doesn't meet agency DSCR minimums (1.20x to 1.25x). The deal needs either a lower purchase price, rent increases before closing, or a bridge loan to stabilize before agency refinance.

Step 5: Calculate Returns

Assuming you negotiate the price down to $4,400,000 and use a bridge-to-agency strategy:

Step 6: Make the Decision

This deal has potential but requires negotiation. The asking price of $4.8M is aggressive given in-place financials. At $4.4M with a clear rent-to-market and expense-correction plan, the deal pencils to a low-teen IRR with a 1.9x equity multiple over 5 years. The key risks are execution on rent increases and the cost of deferred maintenance.

Verdict: Submit an LOI at $4,300,000 to $4,400,000 with contingencies for property inspection and environmental review.

UWmatic can run this entire analysis from document upload to investment decision in minutes — parsing the T-12 and rent roll automatically, integrating live GSE rates, flagging the expense red flags, and generating the projection models shown above.