Most investors analyze deals at random. They look at whatever shows up, run some numbers, feel unsure, and pass. Then they wonder why they've owned nothing for two years.
The fix is boring and powerful: define exactly what you're hunting for, then learn to run the numbers the same way every single time. Do those two things and deals stop being a guessing game. Your agents know precisely what to send you, and you can tell a good one from a bad one in minutes.
This is how I build a buy box and underwrite a multifamily deal.
Build your buy box: six criteria
Don't make a laundry list of 50 requirements. I focus on six metrics, two of them optional.
- Per-unit cash flow. I use a minimum of $200 per unit per month, or $2,400 a year, on proforma (meaning after I apply my strategy to get it there). If you prefer $250, you need fewer units to hit your goal.
- Stabilized cash-on-cash return. Cash flow alone doesn't tell the whole story, because a tiny return on a huge investment is still a bad deal. I want at least 10% stabilized cash-on-cash. Most investors land in the 7 to 12% range.
- Property class and year built. More on the classes below.
- Minimum purchase price. This is about financing, not snobbery. Low-price properties are expensive to finance well.
- Minimum number of units (optional). As you scale, you'll want more doors under one roof. My personal minimum is 10 units, which is specific enough to hand to an agent.
- Growth market (optional). An area with rising population, rents, wages, and prices.
A little flexibility is fine. I wouldn't pass on a deal at $196 per unit or a 9.5% return. The point is to have a standard, not to be rigid about the last dollar.
To make it concrete: if your goal is $100,000 a year in cash flow at $2,400 per unit, you need about 42 units. At $3,000 per unit, 34. So a full buy box might read: B/C class, 10-plus unit properties above $1.2M, 10% stabilized cash-on-cash, in a growth market, producing $2,400 per unit per year. Now you know exactly what to chase.
Property classes, quickly
- A class: 2000s, high-quality materials, no deferred maintenance, highest rents.
- B class: 30 to 35 years old, some deferred maintenance, lower rents than A.
- C class: 36 to 60 years old, dated interiors, deferred maintenance, fewer amenities.
- D class: older than 60 years, more transient tenants, no amenities.
I focus on B and C properties in B neighborhoods. Working-class, affordable, a short drive to amenities, two-bed one-baths renting roughly $800 to $1,400. These tend to deliver the highest returns, hold up best in a downturn, and are the easiest to sell.
Why minimum price matters
Financing gets dramatically better as price rises. Conventional loans technically start at $50,000, but the rates and terms are terrible until you're over $100,000. DSCR (asset-based) lenders usually want a $100,000 to $150,000 minimum loan. Commercial financing is hard under $500,000 and best above $1M. So I recommend a minimum of about $120,000 for residential and $700,000 for 5-plus units. The financing logic behind all of this is in how to finance a rental portfolio with other people's money.
Why multifamily
A quick note on why I focus here. It's nearly impossible to cash flow $1,000 a month from a single-family home, but it's common with small multifamily. There's a whole case for why 2-to-4-unit properties are the sweet spot, but the short version is leverage. You get multiple income streams under one roof, and you use only one of your ten conventional loan slots. I'd much rather use a loan spot for a duplex or a fourplex than a single house. In my Seattle market, outlying duplexes sell for $350,000 to $400,000, which is just $175,000 to $200,000 per unit, well below what a single-family would cost in the same area.
Underwriting: income, expenses, debt
Underwriting is the skill that makes you valuable and successful. Expect to underwrite about 50 deals before it really clicks, so make it a daily or weekly habit and run your numbers by other investors and property managers until you trust them.
Every deal breaks into three parts.
Income. Use both current and proforma rents. Then subtract two kinds of vacancy: physical vacancy (units sitting empty) and economic vacancy (units occupied by tenants who aren't actually paying). The second one trips people up constantly.
Expenses. Two buckets. Operating expenses (the annual cost to run the property) should land around 30 to 50% of your operating income. Then upfront expenses: closing costs and renovations. For a fast insurance estimate while underwriting, I use about $0.60 per square foot of building (a 10,000-square-foot building is roughly $6,000 a year), bumping to $0.65 for older or higher-risk properties. Don't trust the seller's insurance number; verify with a real quote under contract.
Debt. Residential lenders qualify you personally on your debt-to-income ratio. Commercial lenders qualify the property, wanting a debt coverage ratio of 1.2 or higher (1.3 in a small submarket). My target through all of it is a 10% cash-on-cash return. If a deal hits that and the rest of my criteria, I'm making an offer.
Look for value, and verify the rents
Nearly every property I've ever bought came with rents well below market. That's the opportunity. Value-add means a property you can improve, through renovation or by bringing below-market rents up to fair market. Even paint and flooring move the needle, so budget a few thousand per unit up front.
Verify fair-market rents yourself in two steps: first, count how many rentals are currently available in the city (few listings usually means higher rents), then check what comparable properties actually rented for on Rentometer, Zilpy, and Zillow. A deal-analysis tool like DoorProfit speeds this up by underwriting the rents and pulling neighborhood crime data in one pass. The deeper analysis lives in the fast and simple way to analyze multi-family deals.
What this looks like in practice
Three deals I bought over a single year, all listed on the MLS, all found by investor-friendly agents, all under-rented and needing work:
| Deal | Price | Reno | Total invested | Monthly rents | Monthly cash flow | ROI |
|---|---|---|---|---|---|---|
| Greenwood, IN duplex | $155,000 | $19,200 | $62,950 | $2,235 | $1,119 | 21% |
| Mount Vernon, WA duplex | $203,000 | $10,198 | $65,948 | $2,250 | $1,072 | 19.5% |
| Mount Vernon, WA duplex | $236,000 | $5,800 | $69,800 | $2,400 | $1,154 | 20% |
Together those three added about $82,620 in income and $40,140 in annual cash flow, at an average 20% return, which recoups my invested capital in roughly five years, before counting tax benefits, appreciation, and principal paydown. If you want more of these with the full math, I broke down real numbers from my own portfolio, wins and losses alike. No postcards, no door-knocking. Just an investor-friendly agent sourcing deals and the discipline to run the numbers.
Making the offer
Once a deal meets your buy box, you move. For residential 1-4 units, go straight to an offer. For commercial, start with a letter of intent (LOI) to spell out terms before drafting the full contract, and don't bother forming the entity until the pre-closing stage; you can amend the buyer name later.
Your offer includes four things: price, earnest money, contingencies, and close date. Earnest money is your good-faith deposit, typically about 1% of price, refundable if you terminate within your contingency periods. I usually allow five business days to submit it and write in that it won't be deposited until I've received all financials.
The contingencies are what protect that deposit and define how you can walk:
- Ability to secure financing
- Appraisal at or above contract price
- Third-party inspection approval
- Review and acceptance of the seller's financials (12-month P&L, all leases, current rent roll with payment history, and 24 months of operating statements)
That financials review flows straight into the due diligence playbook, where you verify everything before you're committed.
Use contingencies to tie it up
Here's a pattern I've learned to lean on: when you're 100% ready to buy, good deals are nowhere to be found, and the moment you're almost-but-not-quite ready, they show up everywhere. The fix is to tie the deal up anyway. You can write an offer contingent on almost anything, as long as it's disclosed in the contract and the seller agrees to it.
A real example: I had two single-family homes I planned to sell into a 1031 exchange, but the tenants hadn't moved out and the homes weren't even listed yet. Meanwhile two great deals landed in front of me. So I made offers on both, a duplex and a triplex, each contingent on selling my properties and completing the 1031 first. Worst case, the sellers say no and I'm right back where I started. Both said yes, and I had my exchange properties locked up before my own homes ever hit the market.
The same move works when you're short on the down payment, waiting to file your taxes, still lining up a hard money lender, or looking for a partner. Disclose the contingency, give the seller a date you'll resolve it by, and go for it. Finding the money is the easy part. Finding the deal is the hard part, so when you find one, tie it up. Success in this business is more about taking action than having every last detail solved first.
The takeaway
Underwriting isn't glamorous, and it's the single highest-leverage skill in this business. A defined buy box turns a chaotic market into a filter. A repeatable three-part analysis turns gut feel into a decision you can defend. And the discipline to underwrite 50 deals before you trust yourself is exactly what separates the investor who owns 40 units from the one still waiting for the perfect deal to fall in their lap.
Build your buy box this week, write it down, and send it to one investor-friendly agent. Then go underwrite five deals. The numbers get faster, and the right ones start to stand out on their own.
This article is educational and reflects my own experience. It isn't legal, tax, or financial advice. Lending criteria and market conditions vary, so verify the specifics and consult the right professionals before acting.
