THE SHORT ANSWER

Multifamily deal analysis starts with each apartment's lease and payment history, then builds to property-wide income, expenses, debt service, and cash requirements. Separate current operations from the changes you hope to make. A 20-unit building should be understandable unit by unit as well as in a summary spreadsheet.

Start with units, rent, and collections

Verify the legal unit count and reconcile the rent roll with leases, unit status, and collections. Record contract rent, concessions, unpaid balances, and expiration dates. Identify units that cannot currently be rented because of condition or legal restrictions.

For a hypothetical 20-unit property with $1,000 monthly scheduled rent per unit, annual scheduled rent is $240,000. A vacancy and collection allowance of $18,000 and other income of $6,000 produce $228,000 effective income. Use actual evidence to set those assumptions on a real deal.

Build expenses from the property, not a convenient percentage

Itemize taxes, insurance, utilities, repairs, management, services, and staffing where relevant. Compare historical costs with quotes and the way you plan to operate. Include paid management even if the seller performed that work without an explicit fee.

In the hypothetical example, $100,000 of annual operating expenses leaves $128,000 NOI. With $80,000 debt service and $12,000 reserve contributions, modeled annual cash remaining is $36,000 before taxes and additional capital spending.

Hypothetical annual stepAmount
Scheduled rent$240,000
Vacancy and collection losses−$18,000
Other income+$6,000
Operating expenses−$100,000
NOI$128,000
Debt service and reserves−$92,000
Modeled remaining cash$36,000

Model improvements one unit and one month at a time

If the plan includes renovated rents, estimate the work cost, vacancy period, leasing cost, and timing for each affected apartment. Check whether occupied units can be renovated under existing leases and applicable law.

Do not apply the future rent to every unit from the closing date. A staggered timeline can reveal that renovation spending occurs well before additional collections. Fund that gap explicitly.

Stress the operating plan and document the conclusion

Test slower renovations, lower collections, higher insurance, and an unexpected building-system repair. Recalculate NOI, DSCR, cash remaining, and maximum cash needed during the plan.

Write a short memo explaining verified facts, forecast changes, open diligence questions, and reasons the purchase might not fit. Comparing that memo with the source records is more informative than presenting a single projected return.

Common questions

Should I use market rent or current rent?

Model current operations first. Treat market-rent changes as a separate forecast with evidence, legal timing, turnover, and costs.

Does one vacant unit matter in a 20-unit building?

It can. The effect depends on rent, duration, turnover cost, and the cash buffer. Model the actual dollars rather than dismissing one unit as a small percentage.

Sources & further reading

Educational content from Real Estate 101. Updated 2026-09-05. Refer to the original sources and your professional advisers for transaction-specific requirements.