How I Underwrote a $23M Stabilised Apartment Community in DFW

I underwrote a $23M apartment community in DFW.

The seller is keen to sell quickly...

This is a 150-unit garden-style community in a nice neighbourhood, picked up at a lender-forced discount of 40% below replacement cost, already 95% occupied and cash-flowing.

To fund deals like this, I ask 4 questions:

1) What stage of risk are we in?

- Stabilised, not a turnaround
- Renovation program mostly proven already
- Debt quoted, not yet locked

2) What makes the location work?

- DFW metro, fast-growing
- Under a mile from a major interstate
- New supply drying up fast

3) How is the downside protected?

- Fixed-rate, interest-only debt at 75% LTV
- Underwritten to 6% vacancy vs. 4.7% actual
- $800K+ in reserves through the hold

4) Can we control the exit?

- 5-year hold
- Sell to an institution or family office
- No amortisation drag on equity
- Refinance considered before any sale

Verdict:

- Private credit: Weak fit
- Family offices: Strong fit
- Institutions: Medium fit
- UHNW: Strong fit

If you allocate to real assets, let's connect 👋