10 Lessons From Acquiring a $60M Multifamily Portfolio
A three-property, 365-unit portfolio across three markets, on assumable sub-3% HUD debt. Here are ten lessons from getting it closed, from the decisions that are impossible to reverse to the discipline that gets you there.
We closed a three-property, 365-unit multifamily portfolio across three separate markets in two states: Henderson, Nevada, just outside Las Vegas; Fairfield, California, between Sacramento and Oakland; and Grass Valley, up toward Truckee.
The deal carried assumable HUD debt at a blended rate under 3%, with thirty years remaining.
Getting it closed taught me more than any deal I have worked on. Here are ten lessons that outlast the transaction.
1. Focus on one-time, irreversible decisions
Success and longevity in this business come down to making excellent one-time, irreversible decisions: purchase price, debt type, leverage, total basis, and location.
We bought this portfolio at under 50% of replacement cost, in low-supply markets, on a sub-3% assumable loan with thirty years left. You cannot go back and re-make those choices later, which is exactly why they deserve the most scrutiny up front.
2. Take the lead and be proactive
Managing three transactions across three markets at once rewards whoever drives. I built an Excel template that translated each property manager's unit-walk notes into interior cost estimates, which clarified the construction scope and earned the trust of our equity partners.
Nobody hands you clarity on a complex deal. You build it.
3. Pay more for better
The best attorneys, contractors, title firms, and brokers are expensive, and they are worth it.
A trusted advisor team is what keeps a deal from blowing up at the worst possible moment, and something always tests it: a government shutdown, a soft leasing season, a surprise in due diligence.
4. Now is the time
A wave of buying opportunities is coming as 2020 to 2022 bridge loans mature and force sales at today's pricing.
Spend thirty days building your acquisition attack plan now. The next twelve to twenty-four months may be the best window to acquire multifamily in more than a decade, and the buyers who prepared will be the ones who move.
5. Normalize feast or famine
This business is tough, and that is the way it should be. When conditions feel easy or frothy, that is the signal to be careful.
The operators who bought at the 2021 and 2022 peaks mostly wish they had used lower leverage and targeted supply-constrained markets. Doing nothing for long stretches is not failure. It is often what separates the top performers.
6. Make the juice worth the squeeze
When capital is easy to raise, sponsors drift toward a bias for acquisition. The effort and the reward have to justify the brain damage and the risk.
Ask "is this going to be worth it?" before you execute, not after. Opportunity cost is the greatest cost there is.
7. Difficulty unlocks alpha
Challenging deals are competition limiters. Three properties in three distinct markets scared off most buyers: the seller needed a single-buyer portfolio sale, the equity check intimidated individuals, and Grass Valley's tertiary location deterred the institutions.
That difficulty is exactly what let us negotiate excellent prices on stable assets. Where others see a headache, look for the edge.
8. Learn how to learn quickly
Assuming HUD debt meant learning an unfamiliar process fast. We hit an org-chart submission requirement at the 45-day TPA deadline, while simultaneously closing a $30M equity raise that depended on finalized JV agreements.
You will rarely have time to become an expert before you need to act. The skill that matters is acquiring the right knowledge quickly and executing with it.
9. Discipline dictates destiny
Discipline is holding the controllable inputs that lead to the outcomes you want, even when there is no evidence yet that it is working.
We reviewed thousands of deals, underwrote thousands, and submitted more than a thousand LOIs to land fewer than ten under contract. That funnel only pays off if you keep feeding it when nothing is closing.
10. Begin with the end in mind
Think about the next buyer before you acquire. Size to a refinance takeout at maturity in case the market is not strong enough to sell. Sensitize the downside.
Working backward from the outcome you want, and honestly weighing the probability of each path, is first-principles thinking applied to a deal. Your exit assumptions belong at the start of the underwriting, not the end.
What the portfolio taught me about underwriting
Strip away the war stories and every lesson points back to the same place: the quality of the decision is set by the quality of the underwriting behind it.
The irreversible choices, the discipline of the funnel, the exit sized before the entry. Those are underwriting habits, and they are what MultiScreen is built to make repeatable on every deal, not just the one you have time to obsess over.
Terms in this post
- Letter of Intent (LOI)
A letter of intent is a short, generally non-binding document submitted by a prospective buyer that sets out the proposed price and principal terms of a transaction before a purchase agreement is drafted.
- Due Diligence
Due diligence is the contractual period after a purchase agreement is signed during which a buyer inspects the property, audits its financials and leases, and can typically terminate and recover earnest money.
- Exit Cap Rate
The exit cap rate is the capitalization rate assumed to apply when a property is sold at the end of the hold period, and it converts projected final-year net operating income into an assumed sale price.
- Offering Memorandum (OM)
An offering memorandum is the marketing document a broker prepares to sell a commercial property, containing property details, financial statements, rent roll summaries, market data, and a proforma projection.
More reading
- How to Underwrite a Multifamily Deal: A 7-Step Framework
A practical, repeatable framework for underwriting a multifamily acquisition, from rebuilding NOI off the T12 through sizing debt, modeling the business plan, and pressure-testing the exit.
- 5 Underwriting Bottlenecks That Cost You Deals (and How to Clear Each)
The slow part of acquisitions is rarely the analysis. It is the mechanical work between an offering memorandum landing and a defensible number coming out. Here are the five bottlenecks that eat that time, and how to remove each.
- How to Retrade a Multifamily Deal (Without Burning Your Reputation)
A retrade is a price renegotiation after you are under contract. Done with data and good faith it protects your returns. Done cavalierly it costs you the next ten deals. Here is the art and the science of doing it right.