Articles
CRE underwriting frameworks, market analysis, and the metrics that separate good deals from expensive mistakes.
8 Underwriting Mistakes That Kill First-Time CRE Deals
The same eight errors show up in amateur CRE underwriting again and again. Each one inflates returns on paper and hides risk that surfaces after closing. Here's what they are and how to catch them before you sign.
Capital Reserves by Property Type: What CapEx Actually Costs
NCREIF data shows CapEx averages 30%+ of NOI for institutional properties, creating a 100-200 basis point gap between cap rate and true cash yield. Here's what reserves actually cost by property type and how to underwrite them correctly.
Exit Cap Rate: The Assumption That Controls 75% of Your Deal's Value
Terminal value at exit dominates every CRE return projection. A 50 basis point change in exit cap rate can swing your IRR by 300 to 600 basis points. Here's how to stress test it, build a sensitivity matrix, and avoid the cap compression trap.
How Lenders Size Your Loan: The DSCR Test vs. the LTV Test
Lenders apply three tests to size your loan and give you the lowest result. LTV, DSCR, and debt yield each produce a different maximum loan amount. The constraint that binds depends on the rate environment, not the property.
How to Read a CRE Pro Forma (And Spot the Lies)
Every CRE deal starts with a pro forma. Most are built to sell, not to inform. Here's the exact line-by-line framework institutional investors use to audit a pro forma, with the specific numbers that separate reality from marketing.
Interest Rate Stress Testing: The Refinancing Trap That Kills CRE Deals
Most CRE loans mature in 5-10 years. If rates rise 150 basis points before you refinance, does your deal survive? Here's how to stress test before you sign, with real numbers on the maturity wall crushing unprepared investors.
Property Tax Reassessment: The $100K Surprise Waiting at Closing
Most CRE buyers underwrite the seller's property tax bill instead of their own. In reassessment states, that mistake can wipe $68K or more from NOI overnight, crush your DSCR below lender minimums, and turn a good deal into a loss. Here's how to calculate your real tax exposure before you sign.
Value-Add Underwriting: How to Model Renovation Risk and the Path to Stabilization
Value-add deals promise outsized returns, but only if the underwriting accounts for renovation cost, carry cost, lease-up risk, and the gap between going-in and stabilized cap rates. Here's the full framework with a worked 80-unit example.
DSCR Explained: The Number That Decides If You Get the Loan
Debt Service Coverage Ratio is the single most important number in commercial real estate financing. Here's how lenders calculate it, why 1.25x matters, and how to stress test it before you sign.
How to Underwrite a Multifamily Deal in 2026
A complete underwriting framework for multifamily acquisitions. The metrics that matter, the assumptions that kill deals, and the red flags to surface in the first 60 seconds.
Positive vs Negative Leverage: Why Your 'Good Deal' Might Be Losing Money
Cap rate above your loan constant is positive leverage. Cap rate below it is negative leverage. Most retail investors compare to the interest rate instead, and the mistake costs them returns they never realized they were giving up.
Real Estate Cycles Explained: How to Pick Property Types Based on Where We Are in the Cycle
Real estate moves in cycles. The same property type can be a great investment at one point in the cycle and a terrible one at another. Here's the framework institutional investors use to time property type selection.
What Is a Good Cap Rate? It Depends on These 4 Factors
Cap rate is the first number every CRE investor looks at. Most interpret it wrong. Four factors determine whether a cap rate is healthy or a warning sign.