How I Avoid Blind Spots & Win in August

release edition [080]

read time [8 minutes]

Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

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Today at a Glance:

• Underwriting: Blind Spots
• Yardi: 1H26 Wrap Up
• Leasing: Winning in August
• Weekly Listen: Paul Fiorilla

Removing Blind Spots

Two weeks ago in TMD 078 I asked you to hit reply to share your most painful underwriting bottleneck(s), and last week in TMD 079 I shared first five fixes that your answers shaped.

After several more replies, a second thread of challenges became apparent. These themes are less about speed, per se, and more about judgment, which is the most important part of underwriting when pursuing it towards closing.

Here are four of the topics from those responses, along with what I've been building to address each one.

1/ "What's the max price?"

When it comes time to negotiate an LOI or PSA, there is one question that every principal (or investor) asks and almost no model answers quickly: "What is the most that I can pay for this deal and still hit my targeted returns?"

Most of us get there by toggling the purchase price up and down until the IRR looks acceptable, which is slow and unreliable given how many variables go into the IRR in the first place.

I built a solver calculator that inverts the model to replace this tedious process.

Here's how it works: I set the return target (ex: 15% IRR, or a 1.8x multiple), and the solver returns the exact max purchase price. Knowing this number can alter how we pursue an acquisition opportunity, because now the pricing has a defensible floor and defined ceiling instead of just a gut feel.

2/ False Confidence

The second theme is the notion of false confidence, which I keep coming back to because it can be the expensive one.

A model stacked with just a few optimistic assumptions can make an otherwise bad deal look great, and as I wrote in TMD 049, "Buying a property is like entering into a marriage: It's a long-term commitment that's painful and costly to reverse, so avoiding the bad deals is more important than buying the good ones."

So I built two checks that run automatically on every deal. One flags the credit-committee tripwires that most of us have memorized but can still easily miss at 11pm (things like exit cap rate expansion and a thin DSCR). The other is a second-opinion critique that analyzes the underwriting and calls out the most likely objections that an investment committee member would eventually raise.

3/ Downside Protection

The third is downside. Everyone underwrites a base case scenario, most of us glamorize over the potential upside scenario, and yet the downside scenario gets just one paragraph (or none at all) in an investment memo.

Acquiring and operating Multifamily in today's environment requires prudence, defensible assumptions, and realistic stress testing. Because of this, I wanted testing a deal's downside to be one click, rather than a separate tab that I have to double check and remember to include in the memo.

Now, a single toggle recomputes an entire deal's underwriting utilizing three scenarios: base case, upside, and downside. I also built a break-even dashboard that shows the exit cap, occupancy, and the minimum DSCR at which the deal begins to lose money. Comparing the break-even cap rate next to the going-in cap rate can be pivotal in avoiding a property acquisition at the wrong basis.

4/ Debt

The fourth is debt, which has become a major factor in today's volatile environment. Shopping three lender term sheets used to mean three versions of the model and an afternoon of reconciling proceeds, coverage, and returns. Can you say brain damage?

Instead, I built a side-by-side view that compares up to four term sheets against each other on total proceeds, DSCR, and levered IRR simultaneously, with real-time updated debt sizing as any deal assumptions change. In a market where the debt quote can make or break a deal, analyzing this debt comparison shouldn't take longer than the underwriting. Thankfully, now it doesn't.

I'm still in beta testing with a small group of brokers and investors, and I'll be opening this tool up more widely in a few weeks to everyone on the waitlist first. If you want access to the limited Founding Member pricing, simply click below to get added to the early access list.

Summary

The next batch of underwriting bottlenecks listed above are largely judgment related: knowing the max offer price, catching false confidence before the investment committee does, analyzing downside scenarios in one click, and comparing lender term sheets without rebuilding the model three times. Solving these (and many more) challenges have been my focus this week.

Actionable Takeaway

Consider adding two lines to your own investment committee template this week: (1) the break-even exit cap rate next to your going-in cap rate, and (2) the max purchase price at your required target returns. If either number makes you uncomfortable, that discomfort is the analysis. And if you want to see how I've automated all of it, get on the early access list here.

1H26 Wrap Up

Now that H1 2026 is firmly in the rearview mirror, I thought it may be helpful to follow up last week's review of RealPage's H1 data by revisiting Yardi's most recent national Multifamily report.

Yardi Matrix's June 2026 report put national rents up just +1.0% through the first six months of 2026, with the average asking rent at $1,763 in June. For context, the pre-pandemic first-half of the year average rent growth was +2.7%, so we're running at roughly a third of a normal year. June occupancy came in at 94.1% by Yardi's measure, down 60 basis points year-over-year, and absorption over the first five months was about 108,000 units, down 61% from the same stretch last year. Gulp.

None of this data overtly contradicts the greener Q2 RealPage report that I wrote about last week, but more so reframes it. Across both reports, it's clear that demand is recovering after a weak start to the year, but, it's recovering into a market that, broadly speaking, still has a lot of vacant units to fill, which is exactly the "occupancy before rents" sequence I laid out in TMD 078. Owners must lease up their properties in order to regain pricing power before organic rent growth reemerges in a meaningful way.

The continued bifurcation of rent growth across geographies and select markets hasn't changed, either. According to Yardi, New York led the country at +5.6% year-over-year, with San Francisco at +4.7%, Chicago at +2.6%, and Kansas City and the Twin Cities rounding out the top five.

The the bottom five markets included no surprises, with Austin at -4.0%, Denver at -3.1%, Tampa at -2.8%, Phoenix at -2.7%, and Houston at -2.0%.

As you may have guessed, every market in the top five is supply-constrained, and every market at the bottom is still digesting a delivery wave. This is the five-driver market screen from TMD 075 doing its job, and it's the same K-shaped recovery I keep referencing.

Summary

The first half of 2026 saw national rent growth of just +1.0%, almost a third of the +2.7% seen in a normal first half of the year. Demand is improving but occupancy remained soft at 94.1% with absorption down. The gap between supply-constrained and oversupplied markets is as wide as it's been, and nothing in the H1 print argues for underwriting a fast rent recovery in markets that are dealing with elevated new supply.

Actionable Takeaway

If your model still assumes +3.0% year-one organic rent growth, consider stress testing it at +1.0% or flat in year-one. In markets still delivering more than 3.0% of stock, flat effective rents into 2027 is the more defensible base case, and it's worth determining what that assumption does to your overall returns before spending money on pursuit or legal costs.

The August Window

We're in the last stretch of peak leasing season, and the next five weeks often set the stage (or determine) physical occupancy for the winter ahead. Once August ends, move-in traffic often falls, and vacancies can become operationally challenging.

This reality makes this a double-edged sword, having to protect the back door (lease-expirations and NTVs) along with the front door leasing efforts.

A 12-month lease signed today comes back around next summer, which is typically fine. The leases that hurt are the short-term and off-cycle leases that move an otherwise bell-curved expiration schedule into the winter months (December through February), when the least amount of leasing traffic exists to backfill those vacancies. Pricing a 9-month lease and a 12-month lease at the same rent can quietly hand away money, because those two leases carry very different re-leasing risk.

Two ways to protect operations during this upcoming August leasing window.

First, study the expiration calendar by month, rather than just by the occupancy today, and use term-based pricing to steer new and renewing leases away from the winter trough. For example, a resident who wants a 6-month term should pay a premium for it, since the owner is the one absorbing the winter vacancy risk.

Second, run the historical actual days-vacant math on a summer turn versus a winter turn before being stubborn about holding firm on a new-lease rent that would renew in the future winter months. Holding out for another $40 in July can become costly if the unit turns in the winter at an inopportune time.

Summary

The back half of the current Summer leasing season is often a timing decision as much as a pricing one. Filling units now and steering expirations out of the winter months protects next year's occupancy far more than squeezing the last few dollars out of a summer lease.

Actionable Takeaway

Pull the expiration report(s) and count how many leases roll in December, January, and February. If that percentage feels heavy, use term pricing on every new and renewal lease over the next five weeks to reduce the winter renewal exposure, even if it means accepting a slightly lower headline rent to move a future expiration into a stronger leasing month.

Weekly Listen

This week's listen is a conversation with Paul Fiorilla, the Director of Research at Yardi Matrix, on affordable housing and the state of the broader multifamily market, from the J+G Companies channel.

Fiorilla's team produces the Yardi Matrix data I leaned on earlier in this issue, so it's worth hearing the person behind the numbers walk through what's actually driving the supply picture and the affordability squeeze, and how the two collide. If the first-half rent story above left you wanting the "why" underneath it, this episode is a half hour well spent.

You can listen to the full episode here.

Wrap Up

That's it for today. I hope you found this edition of The Multifamily Download insightful.

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