How to underwrite a multifamily deal in 10 minutes

You don't need a 12-tab model to decide whether a deal deserves your time. A tight first pass gets you 80% of the answer in ten minutes, and it protects your calendar from the 90% of listings that don't pencil.

The goal here isn't precision — it's triage. You're deciding whether to build the real model, not whether to close.

1. Rebuild the income, don't trust the brochure

Start from gross scheduled income: units × market rent × 12. Then knock it down with a realistic vacancy factor — 5% is a common placeholder, but sub-markets vary. What you're left with is effective gross income, and it's almost always lower than the pro forma the broker sent you.

2. Expense it honestly

For most stabilized multifamily, operating expenses run 40–50% of effective gross income once you include taxes (reassessed at your purchase price, not the seller's basis), insurance, management, maintenance, and reserves. If a pro forma shows a 30% expense ratio, that's your first red flag.

Net operating income is simply effective gross income minus those expenses. Divide by price and you have your going-in cap rate.

3. Layer in the debt

Cap rate tells you about the asset; cash-on-cash tells you about your equity. Run the loan at today's rate, subtract annual debt service from NOI, and divide the leftover cash flow by your down payment. Check that NOI comfortably covers debt service — a DSCR below ~1.25x is where lenders (and your sleep) start to complain.

The 10-minute verdict

If the going-in cap, cash-on-cash, and DSCR all clear your minimums with conservative assumptions, build the full model. If they don't, you just saved yourself an afternoon.

Want the numbers done for you? My deal calculator runs this exact math live.