mf-underwriter

Multifamily Comprehensive Underwriter — Post-Contract Due Diligence

Overview

This skill runs after an LOI is accepted and the investor is under contract. Its job is to verify everything the screener estimated, find every risk that could hurt the investor, and produce a definitive Go/No-Go verdict before contingencies are released.

Design philosophy: Skeptical first, actionable second. This skill does NOT exist to validate a decision already made. It exists to find every assumption that could cost money, every risk that could kill the investment, and every number that needs confirmation before capital is deployed. If the deal is good, the numbers will prove it. If they don't hold up, the investor walks away before losing real money.

The skill cannot output GO until the Risk Matrix is complete. Two or more unresolved HIGH risks = Yellow or Red verdict, regardless of how good the NOI looks.

---

When This Skill Applies

• Investor is under contract on a multifamily property
• Investor needs to verify financials before releasing due diligence contingencies
• Someone says "underwrite this apartment deal," "run full multifamily DD," "deep dive this property"
• Used as Phase 1 after the mf-screener has secured the contract
• Someone uploads a T12, Schedule E, rent roll, or bank statements and asks to verify the numbers

---

Pre-Flight — Client Investment Preferences

Before running any analysis, load this client's saved multifamily investment preferences from Cloud Brain. These calibrate all thresholds and verdicts to their specific buy box.

Check for Saved Preferences

Search Cloud Brain: search_notes with query "multifamily preferences". Also search for screener analysis: search_notes with "[property name or address] mf screen" to pull Phase 0 screener output if available.

If preferences ARE found:

Display a quick confirmation and proceed:

📋 Underwriting calibrated to your preferences — Min cash flow: $[X]/mo | Target cap: [X–X]% | Min DSCR: [X]x | Class: [X] | Markets: [X]

If screener analysis IS found in memory:

📎 Screener found: Conservative NOI: $[X] | Viability score: [X]/10 | Recommended offer: $[X] | Pursuit decision: [X] | Top flags: [list] Using screener estimates as starting baseline — all figures will be verified against bank statements and Schedule E.

If NO preferences found — run setup first:

"Before we begin underwriting, I need your investment criteria so every threshold and verdict reflects your actual buy box:"

1. What markets or states are you targeting for multifamily?
2. What asset class do you prefer: Class A / B / C / any?
3. What is your unit count range — minimum and maximum?
4. What is your deal size range — minimum and maximum purchase price?
5. What is your minimum acceptable monthly cash flow after ALL debt service?
6. What cap rate range do you typically target?
7. What is the lowest DSCR you will accept?
8. Do you prefer creative financing first or conventional?
9. Risk tolerance: conservative / moderate / aggressive?

Save to memory: write_note → brain/preferences/multifamily-preferences.md

Apply Preferences Throughout This Analysis

Hardcoded Default	Replace With
DSCR thresholds (1.20x / 1.25x)	Client's stated minimum DSCR
Cash flow flags ($500/month)	Client's stated monthly minimum
CapEx reserve by class	Weight toward client's preferred asset class
Cap rate range for valuation matrix	Weight toward client's target cap rate range
GO/NO-GO verdict thresholds	Calibrated to client's risk tolerance
Offer price recommendations	Anchored to client's target cap rate

---

Step 0 — Input Intake & Document Triage

Parse all available documents. For any document not yet provided, add it to the Due Diligence Checklist with HIGH priority.

Tier 1 — Critical (analysis cannot be completed without these):

• T-12 P&L (trailing 12 months)
• 24 months of bank statements (revenue and expense verification)
• Current rent roll: all units, tenant names, lease start/end, current rent, security deposit held, any concessions
• Seller's Schedule E (last 2 years of tax returns)
• Existing debt: full loan statement with balance, rate, term, monthly payment, lender name, loan type

Tier 2 — Required for Full Analysis:

• Property tax bills for all parcels (verify against the seller's stated expense)
• Insurance policy declaration page (ACV vs. RCV; confirm premium is the actual bound cost)
• Utility bills — any landlord-paid utilities for 12 months
• Maintenance and repair logs (24 months)
• Capital improvement history (5 years)

Tier 3 — Due Diligence Period Items:

• Phase I Environmental Site Assessment (or waiver justification)
• Title report (liens, judgments, easements, deed restrictions)
• All permits, certificates of occupancy, and zoning compliance
• Inspection reports: roof, HVAC, plumbing, electrical
• Vacancy history (3 years)

Build a structured property profile from all available inputs. Note confidence level for each data point: Verified / Estimated / Unknown.

---

Step 1 — Revenue Verification (Challenge Everything)

Revenue is verified in 6 steps. Every step is mandatory.

1A — Bank Statement Cross-Check

Compare 24 months of bank deposits to T-12 revenue line by line.

• Calculate: average monthly deposits (12-month trailing)
• Compare to: T-12 gross revenue for the same period
• If deposits < T-12 revenue by more than 5%: MATERIAL REVENUE DISCREPANCY — flag amount and percentage.
• State: "Verified Revenue = $[bank deposits]. T-12 Revenue = $[T-12]. Gap = $[difference]."
• Use the LOWER of the two figures for all downstream calculations.

1B — Schedule E Cross-Check

Compare bank statement revenue to Schedule E Line 3 (Rents Received).

• A large gap between what the bank shows and what was reported to the IRS is a serious flag — either income is being underreported (tax fraud risk transferred to buyer) or the bank deposits include non-rental income.
• State findings plainly. Do not soften this.

1C — Physical Vacancy Verification

From the rent roll:

• Count every vacant unit
• Physical vacancy % = vacant units / total units
• Compare to OM stated vacancy
• If physical > stated: "Actual physical vacancy is [X]%. OM stated [Y]%. This overstates income by $[Z]/year."
• Verify move-in dates — a unit rented 3 weeks ago does not represent stabilized occupancy

1D — Rent Roll Audit

For every unit on the rent roll, verify:

• Lease expiration dates (a wall of month-to-month leases is a risk — note count)
• Any units with concessions, free rent, or side agreements that reduce effective rent
• Any units renting above market (flag — likely not renewable at same rate)
• Any units renting significantly below market (flag — value-add opportunity, but also asks why)
• Security deposits held: verify against state legal requirements

1E — Other Income Verification

For every non-rent income line:

• Laundry, parking, storage, late fees, application fees, etc.
• Verify against bank statements — is the money actually showing up?
• Flag any Other Income that appears owner-managed (e.g., income a new operator may not replicate)

1F — Year-Over-Year Revenue Trend

Plot revenue by year (use 3 years if available):

• Declining trend (2+ years): flag as structural demand or management problem
• Volatile (>15% swings): flag as seasonal or instability risk; stress-test at the low year
• Stable/growing: note positively
• Use 3-year average if current year appears to be an outlier.

VERIFIED GROSS REVENUE = $[final verified amount] List every assumption and every unverified figure with its dollar impact.

---

Step 2 — Full Expense Normalization

Apply ALL expense lines. For every line not on the T-12, add it and explain why. An expense ratio below 35% (tenant-pays-utilities) is impossible for a fully normalized property.

Mandatory Normalization Lines

Expense Line	Calculation Method	Default If Unknown	Flag If
Property Management	9% of Verified EGI (if self-managed)	9% of EGI	Missing from T-12
Property Taxes	Verify against tax bills; calculate post-sale reassessment	Pull from county assessor	Using seller's pre-sale bill
Insurance	Actual bound policy declaration page	$1,000–$1,500/unit/year	Soft quote / ACV policy
Maintenance & Repairs	Actual + 15% first-year cushion	$700/unit/year minimum	Below $500/unit
CapEx Reserve	Client's preferred class: A=$300 · B=$400 · C=$500/unit/yr	Client's class default	Missing entirely
Landlord Utilities	Actual bills if landlord-pays	Estimate from utility comps	Excluded when landlord pays
Landscaping	Actual invoices	$200–$400/unit/year	Suspiciously low
Admin / Accounting / Legal	Actual	$300–$500/unit/year	Missing
Pest Control	Actual	$75–$150/unit/year	Missing
Misc / Contingency	3% of verified gross revenue	3% always	Never remove

Post-Sale Tax Reassessment (Always Run This)

1. Pull the county assessor's current assessed value and tax bill
2. Pull the millage rate from the county website
3. Calculate: New Assessed Value × Millage Rate = Post-Sale Annual Taxes
4. Show: "Seller's current taxes: $[X]. Post-sale taxes at purchase price of $[Y]: $[Z]. Annual delta: $[difference]."

Expense Ratio Check After Normalization

Ratio	Scenario	Verdict
Below 30%	Tenant-pays-utilities	Impossible — add missing lines
30–40%	Tenant-pays-utilities, Class A	Possible if truly new construction
40–50%	Tenant-pays-utilities, Class B/C	Normal
50–65%	Landlord-pays-utilities	Normal
Above 65%	Any	Flag — operational inefficiency or severe deferred maintenance

TOTAL NORMALIZED EXPENSES = $[amount] ([X]% expense ratio)

---

Step 3 — Three-Scenario NOI

Always produce three NOI figures. Never blend scenarios. Never use Upside NOI as the offer basis.

THREE-SCENARIO NOI — [Property Name]

SCENARIO              | FLOOR (Conservative)  | BASE (Stabilized)     | UPSIDE (Value-Add)
----------------------|----------------------|----------------------|----------------------
Revenue Basis         | 3-yr avg OR bank     | Verified current     | All units at market
                      | statements (lower)   | run-rate actuals     | rent, stabilized
Vacancy Used          | [actual low yr] %    | [current physical] % | 5% stabilized
Gross Revenue         | $[amount]            | $[amount]            | $[amount]
Total Normalized Exp  | ($[amount])          | ($[amount])          | ($[amount])
NET OPERATING INCOME  | $[amount]            | $[amount]            | $[amount]
Expense Ratio         | [X]%                 | [X]%                 | [X]%

USE CASE:
- Floor: Stress testing, financing worst-case, walk-away trigger
- Base: Recommended offer price, primary underwriting, DSCR calculations
- Upside: Strategic planning only — never for offer pricing or financing

Identify the top 3 drivers of the gap between Floor and Upside NOI.

---

Step 4 — Valuation Matrix

Build the full matrix using all three NOI scenarios. Assign cap rate range BEFORE showing numbers.

Cap Rate Selection Rationale

Factor	Cap Rate Adjustment
Class A, major MSA, strong demand	Start at 4.5–6.0%
Class B, suburban / secondary market	Start at 6.5–8.0%
Class C, tertiary / value-add	Start at 8.0–10.0%
High-crime submarket	Add 1.0–2.0%
FEMA flood zone	Add 0.5–1.5%
Deferred maintenance evident	Add 0.5–1.0%
Rent control jurisdiction	Add 0.5–1.5%
No CapEx done in 10+ years	Add 1.0%

State the selected cap rate range and justify in 2–3 sentences. Note where client's target cap rate range falls.

VALUATION MATRIX — [Property Name]
Cap Rate Range: [X]% – [X]% | Client's Target: [X]% – [X]% | Rationale: [justification]

                      | [low cap]%   | [mid cap]%   | [high cap]%
----------------------|--------------|--------------|-------------
FLOOR NOI ($[X])      | $[X÷low]     | $[X÷mid]     | $[X÷high]
BASE NOI ($[X])       | $[X÷low]     | $[X÷mid]     | $[X÷high]
UPSIDE NOI ($[X])     | $[X÷low]     | $[X÷mid]     | $[X÷high]
CONTRACT PRICE ($[X]) | [cap%]       | [cap%]       | [cap%]

Price Per Unit @ Contract: $[contract ÷ units]
Price Per SF @ Contract: $[contract ÷ GBA]
Revenue Multiple @ Contract: $[contract ÷ verified revenue]x

State the recommended offer range based on Base NOI and the client's target cap rate range. Flag if the contract price falls outside client's target range.

---

Step 5 — DSCR & Financing Analysis

Model DSCR at three price points: (1) Contract price, (2) Recommended offer, (3) Lowest viable price.

Scenario A — Assumed Existing Loan + Seller Carry

• Assumed loan: $[balance] at [rate]% | Monthly P&I: $[payment]
• Seller carry: $[purchase − assumed balance] at [rate]% I/O | Monthly: $[payment]
• Annual debt service: $[total]
• DSCR = Base NOI ÷ Annual Debt Service = [X]x

Scenario B — New Conventional (25% Down)

• Purchase price: $[price] | Down: $[25%] | Loan: $[75%] at [current rate], 30yr amort
• Monthly P&I: $[payment] | Annual: $[× 12]
• DSCR = Base NOI ÷ Annual Debt Service = [X]x

Scenario C — Agency (Fannie/Freddie, if eligible)

• LTV: 80% | Rate: current agency rate | 30yr amortization
• Requires: stabilized occupancy (90%+ for 90 days), DSCR ≥ 1.25x, property condition
• DSCR = Base NOI ÷ Annual Debt Service = [X]x

DSCR ANALYSIS

Price Point     | Contract ($[X]) | Recommended ($[X]) | Floor ($[X])
----------------|-----------------|--------------------|--------------
Scenario A DSCR | [X]x            | [X]x               | [X]x
Scenario B DSCR | [X]x            | [X]x               | [X]x
Scenario C DSCR | [X]x            | [X]x               | [X]x
Client Min DSCR | [X]x ✅/❌       | [X]x ✅/❌          | [X]x ✅/❌

Flag any DSCR below client's minimum OR below 1.0x. Flag DSCR 1.0–1.20x: "Below conventional minimum. Requires seller carry, larger down payment, or price reduction."

Also model True Cash Flow after all debt service and compare to client's minimum monthly cash flow target.

---

Step 6 — Risk Matrix

Every identified risk is entered here. The overall deal rating is calculated from this matrix.

FINANCIAL RISKS

Risk	Severity	Finding	Mitigation
Revenue actuals < T-12 stated	HIGH/MED/LOW	[Finding]	[Action]
Physical vacancy > stated vacancy	HIGH/MED/LOW	[Finding]	[Action]
No management fee on T-12	HIGH/MED/LOW	[Finding]	[Action]
CapEx reserve missing	HIGH/MED/LOW	[Finding]	[Action]
Insurance soft-quoted / ACV only	HIGH/MED/LOW	[Finding]	[Action]
Post-sale tax reassessment impact	HIGH/MED/LOW	[Finding]	[Action]
Maintenance below $500/unit/year	HIGH/MED/LOW	[Finding]	[Action]
Only 1 year of financials available	HIGH/MED/LOW	[Finding]	[Action]
"Other Income" unverified / owner-dependent	HIGH/MED/LOW	[Finding]	[Action]
Schedule E income < bank deposits	HIGH/MED/LOW	[Finding]	[Action]
NOI below level needed to meet client's DSCR minimum	HIGH/MED/LOW	[Finding]	[Action]

LEGAL & REGULATORY RISKS

Risk	Severity	Finding	Mitigation
Rent control / stabilization ordinance	HIGH/MED/LOW	[Finding]	Research city ordinance
Zoning non-conforming / grandfathered	HIGH/MED/LOW	[Finding]	Verify rebuild rights
Code violations or open permits	HIGH/MED/LOW	[Finding]	Pull permit history
Lease expirations clustered near close	HIGH/MED/LOW	[Finding]	Review all lease dates
Month-to-month tenants (>30% of units)	HIGH/MED/LOW	[Finding]	Review state tenant laws
Undisclosed easements or deed restrictions	HIGH/MED/LOW	[Finding]	Title review
Eviction history / problem tenants	HIGH/MED/LOW	[Finding]	Request 3-year history

PHYSICAL & INFRASTRUCTURE RISKS

Risk	Severity	Finding	Mitigation
Roof age unknown / near end of life	HIGH/MED/LOW	[Finding]	Roof inspection
Aluminum wiring (pre-1973 construction)	HIGH/MED/LOW	[Finding]	Licensed electrical inspection
Galvanized plumbing (pre-1970 construction)	HIGH/MED/LOW	[Finding]	Plumbing inspection
HVAC systems aged / deferred	HIGH/MED/LOW	[Finding]	HVAC inspection
FEMA flood zone (anything other than X)	HIGH/MED/LOW	[Finding]	Flood insurance cost
Phase I Environmental not completed	HIGH/MED/LOW	[Finding]	Order immediately
ADA non-compliance	HIGH/MED/LOW	[Finding]	ADA audit + cost estimate
Parking inadequate for unit count	HIGH/MED/LOW	[Finding]	Local code check
Deferred exterior / structural maintenance	HIGH/MED/LOW	[Finding]	Licensed inspector

MARKET & DEMAND RISKS

Risk	Severity	Finding	Mitigation
Outside client's target markets	HIGH/MED/LOW	[Finding]	Confirm client buy box applies
Crime score above 60 (scale of 100)	HIGH/MED/LOW	[Finding]	NeighborhoodScout research
Population declining in submarket	HIGH/MED/LOW	[Finding]	Census trend analysis
Single employer driving local demand	HIGH/MED/LOW	[Finding]	Employer diversification research
New supply (units under construction nearby)	HIGH/MED/LOW	[Finding]	Local permit research
Rent control legislation pending	HIGH/MED/LOW	[Finding]	City council agenda research
Property on market >180 days / prior contract failure	HIGH/MED/LOW	[Finding]	Ask broker for history

Overall Deal Risk Rating

Rating	Criteria	Recommendation
🟢 GREEN	0 HIGH risks; financials verified; DSCR meets client's minimum	GO HARD — release contingencies
🟡 YELLOW	1–2 HIGH risks, resolvable; DSCR near client's minimum; some unverified	GO WITH CONDITIONS — specify exactly what must clear
🔴 RED	3+ HIGH risks unresolved; DSCR below client's minimum; material misrepresentation	DO NOT GO HARD — specify what moves this to Yellow

OVERALL DEAL RATING: [GREEN / YELLOW / RED]

---

Step 7 — Due Diligence Checklist

Generate a deal-specific, prioritized DD checklist. Every HIGH risk from the Risk Matrix becomes a DD item.

Pre-Contingency Release (Complete Before Going Hard)

#	Item	Request From	Status	Priority
1	24 months bank statements — verify revenue	Seller	☐	CRITICAL
2	Schedule E (last 2 years) — cross-check income	Seller / CPA	☐	CRITICAL
3	Current rent roll — all tenants, rates, lease dates, deposits	Seller	☐	CRITICAL
4	Executed leases for all occupied units	Seller	☐	CRITICAL
5	Post-sale property tax assessment — county assessor	County	☐	CRITICAL
6	Hard-bound insurance quote (RCV, not ACV)	Insurance broker	☐	CRITICAL
7	Title report — liens, judgments, easements	Title company	☐	CRITICAL
8	Existing loan statement — balance, rate, term, assumability	Lender	☐	CRITICAL
9	Full building inspection — roof, HVAC, plumbing, electrical	Licensed inspector	☐	CRITICAL
10	Phase I Environmental Site Assessment	Environmental firm	☐	CRITICAL
11	3-year capital improvement history	Seller	☐	HIGH
12	Maintenance and repair logs (24 months)	Seller	☐	HIGH
13	Utility bills — landlord-paid items only (12 months)	Seller	☐	HIGH
14	Rent payment history — delinquency rate	Seller / PM	☐	HIGH
15	Crime score and trend research — submarket	NeighborhoodScout	☐	HIGH
16	Rent control / tenant protection ordinance verification	City/County	☐	HIGH
17	Zoning compliance certificate	City/County	☐	HIGH
18	Certificate of Occupancy for all buildings	City/County	☐	HIGH
19	Open permits or code violations check	City/County	☐	HIGH
20	Roof inspection and age verification	Roofing contractor	☐	HIGH
21	Electrical inspection (aluminum wiring risk if pre-1973)	Licensed electrician	☐	HIGH
22	Plumbing inspection (galvanized risk if pre-1970)	Licensed plumber	☐	HIGH
23	Insurance claims history (5 years)	Seller / insurance broker	☐	MEDIUM
24	FEMA flood map confirmation	FEMA / surveyor	☐	MEDIUM
25	Vacancy history (3 years)	Seller / PM	☐	MEDIUM
26	Security deposits held — full schedule	Seller	☐	MEDIUM
27	Vendor contracts and any assignable agreements	Seller	☐	MEDIUM
28	Any pending litigation — seller or property	Seller / title search	☐	MEDIUM
29	ADA compliance status	ADA consultant	☐	LOW-MEDIUM
30	Market rent comps — current (3rd party)	Appraisal or PM survey	☐	MEDIUM

Add any deal-specific items from the Risk Matrix.

---

Step 8 — Seller Question Bank

Generate 25 hard, specific questions tailored to this deal.

Financial Questions (always required):

1. Can you provide 24 months of bank statements showing deposits that match your T-12 revenue?
2. What is the effective rent per unit — what does each tenant actually pay after any concessions, move-in deals, delinquencies, or long-term discounts?
3. Your T-12 shows no property management fee. Have you calculated what a buyer would pay a third-party manager?
4. What capital improvements have you made in the last 5 years, and what major replacements do you expect will be needed in the next 5?
5. Are all revenue streams on this T-12 expected to continue post-sale, or is any income tied to your personal relationships or on-site presence?
6. How does this year's revenue compare to the prior 3 years? Is this year representative, above average, or below average?
7. Are there any deferred rent payments, unpaid balances, or tenants in any repayment arrangement?
8. Have you ever had a revenue audit, and would you provide your Schedule E for cross-referencing?
9. Are any of the T-12 expense payments made to related parties, family members, or entities you control?
10. What is your current rent delinquency rate — how many tenants are behind on rent right now?

Legal & Regulatory Questions (always required): 11. Is this property in a jurisdiction with any form of rent control, rent stabilization, or just-cause eviction protection? 12. Are all current operating permits current and have you confirmed they are transferable to a new owner? 13. Are any tenants classified as legal tenants with formal eviction protections under state law? 14. Is the property's current use specifically permitted by right, or does it operate under a grandfathered status or conditional use permit? 15. Have you ever received a notice of violation, code enforcement action, or government inquiry related to this property? 16. Are there any pending or threatened legal actions involving the property or any tenant?

Physical & Infrastructure Questions (tailor to building age): 17. What is the age and condition of each roof? Have any been replaced, and do you have documentation? 18. (If pre-1973): Has the electrical been inspected for aluminum wiring? 19. (If pre-1970): What type of plumbing is in place — copper, galvanized, PVC? Has it been inspected or replaced? 20. When was the HVAC last serviced or replaced in each unit? Do you have service records? 21. Has a Phase I Environmental Assessment ever been conducted? Are you aware of any underground storage tanks, contamination, or prior industrial use?

Operational Questions: 22. Why are you selling now? What would you do differently if you were keeping this property for another 5 years? 23. Is the property currently self-managed or third-party managed? What does your management routine look like? 24. Which, if any, tenants would you describe as problematic, and what is the eviction history for the past 3 years? 25. What do you know about the vacant units — how long have they been vacant, what is the cause, and what does it cost to make them rent-ready?

---

Step 9 — Go / No-Go Summary

This section is always the last thing generated. Never produce the verdict before the Risk Matrix is complete.

GO / NO-GO VERDICT — [Property Name]

OVERALL RISK RATING: [GREEN / YELLOW / RED]

VERIFIED NOI: $[Base NOI] (Floor: $[X] | Upside: $[X])
RECOMMENDED OFFER RANGE: $[X] – $[X]
CONTRACT PRICE: $[X] — [above/below/within] recommended range
DSCR AT RECOMMENDED PRICE: [X]x ([Scenario A/B/C]) vs. client minimum of [X]x ✅/❌
TRUE MONTHLY CASH FLOW: $[X]/month vs. client minimum of $[X]/month ✅/❌

THE 3 BIGGEST RISKS:
1. [Most critical — specific, quantified where possible]
2. [Second risk]
3. [Third risk]

THE 3 BIGGEST OPPORTUNITIES:
1. [Most compelling upside — specific, quantified]
2. [Second opportunity]
3. [Third opportunity]

RECOMMENDED NEXT STEPS:
1. [Immediate action]
2. [Second action]
3. [Third action]
Timeline: [X days to complete verification before DD deadline]

VERDICT:
[GO HARD — Release contingencies. All key risks resolved. Numbers verified. Meets client's DSCR and cash flow minimums.]
[GO WITH CONDITIONS — Release contingencies on [specific items]. Hold on [specific items] until [action].]
[RENEGOTIATE — Verified NOI of $[X] supports a maximum price of $[X] at [cap]% cap to meet client's criteria. Current contract price of $[X] requires a reduction of $[amount].]
[WALK — [Specific reason]. The deal as structured cannot meet client's minimum criteria at any reasonable price because [specific finding].]

---

Output Format

Deliver the complete report in this sequence:

1. PREFERENCES CONFIRMATION — Client buy box applied, screener findings referenced if available
2. PROPERTY PROFILE — Address, unit count, contract price, input confidence level, data sources
3. RISK ALERT BOX — Any HIGH or CRITICAL risks appear prominently before the financials
4. REVENUE VERIFICATION — All 6 steps, discrepancies flagged, verified revenue stated
5. EXPENSE NORMALIZATION — Full normalized schedule with every addition explained
6. THREE-SCENARIO NOI — Floor / Base / Upside comparison table
7. VALUATION MATRIX — Cap rate table with contract price position, client target highlighted
8. DSCR & FINANCING — All scenarios at contract, recommended, and floor prices vs. client minimums
9. RISK MATRIX — All 4 categories, rated, with mitigations
10. DUE DILIGENCE CHECKLIST — Prioritized, deal-specific, 25–30 items with status boxes
11. SELLER QUESTION BANK — 25 hard questions, deal-specific
12. GO / NO-GO SUMMARY — Verdict, NOI, offer range, top risks/opportunities, next steps vs. client criteria

Always save the analysis to: brain/deal-analyses/[property-slug]-mf-underwrite-[YYYY-MM-DD].md

---

Key Benchmarks

Metric	Conservative	Standard	Strong
Cap rate (Class A major MSA)	6.0%+	4.5–6.0%	Below 4.5%
Cap rate (Class B suburban)	8.0%+	6.5–8.0%	Below 6.5%
Cap rate (Class C tertiary)	10.0%+	8.0–10.0%	Below 8.0%
Expense ratio (tenant pays utilities)	48%+	38–48%	Below 38%
Expense ratio (landlord pays utilities)	60%+	50–60%	Below 50%
CapEx reserve (Class A)	$300/unit/yr	$350/unit/yr	—
CapEx reserve (Class B)	$400/unit/yr	$450/unit/yr	—
CapEx reserve (Class C)	$500/unit/yr	$600/unit/yr	—
Maintenance minimum	$500/unit/yr	$700/unit/yr	$900/unit/yr
Management fee (3rd party)	10% EGI	8–9% EGI	6–8% EGI
Physical vacancy (stabilized)	8%+	5–8%	Below 5%
DSCR (conventional minimum)	1.20x	1.25x	1.40x+
DSCR (agency Fannie/Freddie)	1.25x	1.30x	1.40x+
True monthly CF/unit	$50	$150–$250	$400+

---

Error Handling

• Bank statements not provided: Flag prominently. Proceed with T-12 figures but label all NOI as UNVERIFIED ESTIMATES. Add bank statements as #1 DD checklist item.
• Only 1 year of financials: Use it but flag. Apply 10% revenue haircut to conservative scenario.
• Phase I not available: Add to DD as CRITICAL. Environmental contamination can prevent any financing and create unlimited liability.
• Rent roll not provided: Cannot complete a meaningful analysis. Request immediately. State plainly: "Without a current rent roll, income is entirely unverified. Do not release contingencies."
• Deal looks excellent across all metrics: Do not lower the guard. State positive findings, then still run every risk check.
• Seller refuses to provide Schedule E: Flag as HIGH risk. A seller who won't provide tax returns on a commercial deal is a serious warning sign. Note in Risk Matrix.
• Client preferences not set: Run setup interview before any analysis.
• DSCR meets bank minimums but not client's minimum: Flag specifically — the deal may be financeable but does not meet client's stated criteria.