How I underwrite

Same order every time, and the order matters. Most people fall in love with a building before they know what it earns, and then the spreadsheet becomes an exercise in justifying the feeling.

1. Income that actually arrives

Start with collected rent for the last twelve months, not the rent roll and not the proforma. Then look at who is behind, who is month to month, and what the neighbors are actually getting for a comparable unit.

2. Expenses at real-world numbers

Taxes after the sale, not the seller’s frozen assessment. Insurance at today’s quote. Management at market rate even if you plan to self-manage, because your time is not free. Repairs and reserves that assume things break, because they do.

3. The work, priced by someone who does it

Walk the building with a contractor before you are under contract if you can. Roof, panel, plumbing stack, parking. The cosmetic list is the cheap part and it is the only part most buyers price.

4. The bad version

Run it again with rates a point higher, rents flat, and the renovation taking twice as long. If the deal still survives, it is a deal. If it only works in the good version, it is a bet.

This is how I look at deals, not investment advice. Numbers in any example are illustrative.