Multifamily Underwriting Examples: Screen 57 Deals

Most multifamily underwriting examples walk you through a deal that closed. They show you the rent comp grid, the T-12, the sensitivity table, the exit multiple. What they don’t show you is the 57 deals Ken Lundin screened in three months that never made it to a model.

Across 57 leads in three months, no letter of intent went out: most deals die on price or missing data long before an offer. The question isn’t whether you can build a spreadsheet. It’s whether you can say no before you waste the time to build one.

Returns in value-add multifamily come from repairing under-managed operations, not from betting on appreciation — it is an operating strategy, not a property class. That means you need volume at the top of the funnel. It also means you need ruthless screens before you price.

Of 12 leads that could be tested on the 1% screen, 2 passed and 3 failed; 7 had rents but no asking price. The problem isn’t modeling skill. It’s knowing which deals earn a model in the first place.

Key Takeaway: Most multifamily underwriting examples demonstrate how to analyze a deal that already passed initial screens. The harder skill is killing deals before you model them. Across 57 leads in three months, zero reached letter-of-intent stage—most failed on price, incomplete data, or market veto conditions. Four sequential screens—market veto, size and data completeness, the 1% rule, and basis tolerance—let you say no in minutes instead of hours. This approach prioritizes pipeline velocity over individual deal heroics.

TL;DR

Most underwriting examples teach you how to model a deal; we use four binary screens to kill deals in under two minutes before opening a spreadsheet
The 1% rule—monthly rent divided by asking price—is the first gate: if it doesn’t clear 1%, the deal can’t hit our return threshold even if everything else is perfect
Location and asset grade come second: if the market is on Ken Lundin’s veto list or the property is C-minus or below, it’s out no matter what the broker says
Of 12 leads that could be tested on the 1% screen, 2 passed and 3 failed; 7 had rents but no asking price—most deals never get enough data to screen

Step 1: Apply the Four Hard Screens Before You Build a Multifamily Underwriting Model

The 1% Screen

A deal fails the first screen when in-place monthly rent per door divided by asking price per door is below 1.00%. That’s it. If a 50-unit property is priced at $5 million and the current monthly rent roll is $48,000, you’re at 0.96% per door. Declined.

Of 12 leads that could be tested on the 1% screen, 2 passed and 3 failed; 7 had rents but no asking price. The screen is binary. You either have the ratio or you don’t.

Most brokers will tell you to look past the number because of “upside” or “repositioning opportunity.” That’s exactly backward. Returns in value-add multifamily come from repairing under-managed operations, not from betting on appreciation—it is an operating strategy, not a property class.

If the current owner already pushed rents and you’re still below 1%, you’re buying at the wrong basis.

Location and Asset Grade

Only four things decline a deal before pricing: a failed 1% screen, a grade-D location, a Class D asset, or a price above the mandate; subsidized income and C-grade locations are called out, not declined.

A D-location is a market I’ve already vetoed. Ken Lundin’s veto list names the conditions that disqualify a market outright no matter how good an individual deal looks; supply pipeline is the most common single reason a market is vetoed.

A Class D asset is one where deferred maintenance has crossed into structural. Think foundation, envelope, or life-safety systems that weren’t addressed in the last cycle.

C-grade locations and subsidized-income properties don’t get declined. They get flagged for different return thresholds and different exit assumptions.

Price Mandate

Lundin Capital declines any acquisition priced above $20 million; exactly $20 million is allowed. This isn’t negotiable. It’s a fund-size constraint, a liquidity constraint, and a complexity constraint.

Deals above the cap don’t get modeled. They get a polite pass.

Missing Data

If the broker sends a teaser with no rent roll, no trailing twelve financials, and no unit mix, the deal doesn’t advance. Across 57 leads in three months, no letter of intent went out: most deals die on price or missing data long before an offer.

I’m not chasing information that should have been in the first email. If the seller isn’t organized enough to provide basic data, the property wasn’t managed well enough to buy.

Step 2: Estimate Provisional NOI and Apply the 78% Factor Once

When you don’t have a trailing-twelve operating statement—and most brokers send a rent roll first—you need a way to price the deal without pretending you have data you don’t.

We estimate NOI at 50% of gross potential rent. We label it provisional until the real statement arrives.

“When only a rent roll exists, NOI is estimated as gross potential rent times 50%, labelled provisional until the trailing-12 arrives.” — Ken Lundin, Lundin Capital acquisition records and screening standards (August–October 2026 pipeline, 57 leads)

That 50% is not optimistic. It assumes the building is reasonably managed, not a disaster. If you’re looking at value-add multifamily—where returns come from repairing under-managed operations, not from betting on appreciation—the actual expense ratio might be 55% or 60%.

The provisional number gets you close enough to decide whether the deal survives the price screen. If it doesn’t, you saved yourself the work of chasing financials that won’t change the answer.

Calculate Gross Potential Rent from the Rent Roll

Add up every unit’s current rent. If a unit is vacant, use the last lease rate or the average of comparable units in the building. That sum is your monthly gross; multiply by twelve.

Multiply by 50% to Estimate Provisional NOI

Gross potential rent times 0.50 gives you a provisional net operating income. This is not underwriting. It’s a filter. If the deal dies here, you never needed the trailing-twelve.

Apply the Portfolio Discount Once—Never Twice

We buy only off-market portfolios. We apply a 78% factor to the sum of the provisional prices.

“The 78% factor is applied once; on a 6% market cap it already equals a 7.69% yield, so no second cap-rate premium is stacked on top.” — Ken Lundin, Lundin Capital acquisition records and screening standards (August–October 2026 pipeline, 57 leads)

I’ve seen buyers discount the portfolio, then add a second premium to the cap rate for “portfolio risk.” That’s double-counting. The 78% already reflects the illiquidity and execution risk of buying five buildings at once.

Compare Market Rent Only to Size the Upside

“Market rent is defined as comparable rents within about one mile at similar buildings, and it is used only to size the upside, never to set the price.” — Ken Lundin, Lundin Capital acquisition records and screening standards (August–October 2026 pipeline, 57 leads)

If in-place rent is $950 and market is $1,100, that $150 gap tells you whether there’s a value-add play. It does not tell you what to pay today.

According to National Association of Home Builders (analysis of Census Bureau Survey of Construction), multifamily completions fell to 484,000 units in 2025 after the highest number in nearly 40 years in 2024. 57% of new units were in buildings of 50 or more units. Supply pressure varies widely by submarket.

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Frequently Asked Questions About Multifamily Underwriting Examples

What is the 1% rule in multifamily underwriting?

Monthly market rent needs to equal or exceed 1% of the asking price. If a property is listed at $3 million and the rent roll shows $28,000 per month in market rents, it fails. You need $30,000 or higher to clear the screen.

Of 12 leads that could be tested on the 1% screen, 2 passed and 3 failed; 7 had rents but no asking price.

Why would a deal have rents but no asking price?

Brokers drip-feed information to create urgency. Sometimes they’re still fishing for a number the seller will accept. The listing is live but the seller hasn’t committed to a floor.

You get a rent roll and a request for your “best offer.” We don’t bid blind. If there’s no price, there’s no screen. The lead stays in limbo until one appears or we move on.

How do you define market rent when underwriting multifamily properties?

Market rent is what a vacant unit would lease for today at current condition. Not in-place rent. Not the pro forma rent after renovation.

I use rent comps within a half-mile, adjusted for unit mix and condition. I ignore any lease signed more than twelve months ago. If the property is 80% occupied at below-market rates, I underwrite to market. If it’s stabilized at market, I use the rent roll as-is.

What does the 78% factor mean and when do you apply it?

The 78% factor is applied once; on a 6% market cap it already equals a 7.69% yield, so no second cap-rate premium is stacked on top. You use it when estimating the portfolio discount on a small asset—anything under about 30 units—where the buyer pool is thinner and liquidity is worse.

We apply it to the provisional NOI, not to the asking price. Never twice in the same calculation.

Do you decline Class C locations or only Class D?

We decline both if they’re on the veto list. The trigger isn’t the class label—it’s supply pipeline, crime trend, or employer concentration.

Ken Lundin’s veto list names the conditions that disqualify a market outright no matter how good an individual deal looks; supply pipeline is the most common single reason a market is vetoed. A stable Class C neighborhood with no new construction and diversified employment can clear the screen. A Class C zip code with 400 units breaking ground in twelve months cannot.

According to Stanford GSB / Hoover Institution / The Miles Group (2025 CEO Coaching and Kitchen Cabinet Survey), 58% of CEOs use a professional coach to discuss business, leadership, and self-development. That’s up from 34% a decade earlier. The same principle applies to underwriting: external perspective catches blind spots.

If a deal passes all four screens, does it automatically get an offer?

No. Passing the screens means it earns a full model and a site visit, not a letter of intent. Across 57 leads in three months, no letter of intent went out: most deals die on price or missing data long before an offer.

Returns in value-add multifamily come from repairing under-managed operations, not from betting on appreciation—it is an operating strategy, not a property class. Even a deal that prices well can fail on execution risk once we’re inside the building.

How long does it take to run a deal through the four screens?

Two minutes if the data is clean. Five if you need to pull comps or check the veto list. The 1% rule is instant math. The price cap is binary—Lundin Capital declines any acquisition priced above $20 million; exactly $20 million is allowed.

The location screen is a lookup, not a debate. The only variable is data completeness: if you’re missing rent rolls or trailing financials, the clock stops. The deal sits until the broker delivers or you walk.

What happens when a multifamily underwriting example shows a deal that would fail your screens?

Most published case studies show deals that already closed. They skip the screening phase entirely. That’s the problem. You’re learning how to justify a deal, not how to kill it.

If a published example shows a 0.85% rent-to-price ratio and calls it a “value-add opportunity,” that’s a deal we would have declined in 90 seconds. The case study teaches you how to rationalize a bad basis. Our screens teach you how to avoid wasting time on it.

How do you handle multifamily underwriting when the broker won’t provide a trailing-twelve?

We don’t. If the broker won’t send a T-12 after one request, the deal is out. Across 57 leads in three months, no letter of intent went out: most deals die on price or missing data long before an offer.

A seller who won’t provide basic financials is either hiding something or doesn’t have their act together. Either way, it’s not a building we want to own.

What’s the difference between provisional NOI and actual NOI in multifamily underwriting?

Provisional NOI is gross potential rent times 50%. It’s a placeholder we use when we only have a rent roll. Actual NOI comes from the trailing-twelve operating statement. It shows real expenses, real vacancy loss, real collections.

Provisional gets you close enough to screen the deal. Actual tells you whether to make an offer. We never make an offer based on provisional numbers.

Bottom Line

Most multifamily underwriting examples show you how to justify a deal. The actual skill is killing it before you waste analyst time. Across 57 leads in three months, no letter of intent went out: most deals die on price or missing data long before an offer.

Build your four screens. Apply them in order. Track what kills each deal. The pattern you see in your pipeline—not in someone else’s closed transaction—is the only underwriting lesson that matters.