How I Underwrote a $56M Ground-Up Multifamily in Northwest Houston

I underwrote a $56M multifamily in Houston, Texas.

Site work is ahead of schedule, and permitting came in $1M under budget before any units break ground.

- 309 units, garden-style, 3-story.
- Market rent: $2.00/SF, $1,810/unit avg.
- Experienced developer, proven track record.
- 20K+ new jobs by 2028 (Chevron anchor).
- Greater Houston rents up 42% last 5 years.
- 24-month exit window to refinance.
- Zoned to top school district, energy corridor.

This is a309-unit ground-up development in Northwest Houston by an experienced local developer targeting stabilisation in 2028. The thesis: supply-constrained market, 20k new jobs anchoring demand, operator with execution track record.

To fund deals like this, I always ask 4 questions:

1) What stage of risk are we in?

- Ground-up construction through stabilization.
- Permits and construction docs already closed.
- Hard costs locked via fixed-price GC contract.

2) What makes the location work?

- 20K+ jobs arriving 2028–2030.
- 42% rent growth over past 5 years.
- 1M+ residents within 5-mile radius.
- No major competing supply pipeline.

3) How is the downside protected?

- 8–10% preferred return shields exit timing risk.
- Soft costs came in $1M under budget.
- Site running ahead of schedule.
- Sponsor holds 10% co-invest (aligned).

4) Can we control the exit?

- Refinance at stabilisation is base case.
- 24-month window (tight but executable)
 - Fundamentals support rent growth.
- Operator has managed similar exits.

The deal assumes 20k jobs arrive on schedule by 2028–2030. Job delay or underperformance tightens rent assumptions and extends hold past 24 months.

My verdict:

Institutions: Weak fit
Private Credit: Strong fit
Family Offices: Strong fit

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