Underwriting a multifamily property involves analyzing the property’s financial performance and potential for generating income. Here are the steps to underwrite a multifamily property:

1. Gather property information: Collect as much information as possible about the property, including the number of units, rental rates, occupancy rates, expenses, and other financial data.
2. Analyze the financials: Review the property’s financial statements, including the income statement, balance sheet, and cash flow statement. Identify any trends or issues that may affect the property’s performance.
3. Calculate key metrics: Use the financial data to calculate key metrics such as net operating income (NOI), cash flow, cap rate, and debt service coverage ratio (DSCR). These metrics help you evaluate the property’s financial performance and potential.
4. Conduct a market analysis: Research the rental market in the area where the property is located. Look at rental rates, occupancy rates, and other market trends to determine how the property compares to similar properties in the area.
5. Assess the property’s condition: Evaluate the physical condition of the property, including the age and condition of the building, systems, and appliances. Consider the cost of any needed repairs or renovations.
6. Consider the location: Evaluate the property’s location and its proximity to amenities such as public transportation, shopping, and entertainment. Consider how the location affects the property’s potential for generating income.
7. Evaluate the management team: Assess the property management team’s experience and capabilities. Consider whether they have the skills and resources necessary to effectively manage the property.
8. Perform a sensitivity analysis: Conduct a sensitivity analysis to assess how changes in key metrics such as rental rates or occupancy rates would affect the property’s performance.

Overall, underwriting a multifamily property requires a thorough analysis of the property’s financials, market conditions, physical condition, and management team. It is important to be as thorough as possible in your analysis to ensure that you have a complete understanding of the property’s potential for generating income.