Multifamily apartments

Read the lease structure line first. It tells you who is exposed to rising property taxes, rising insurance and a failing roof — which is usually a bigger difference between two buildings than the rent either one collects.

Diligence is the list of things you check before the money moves, and it is the part of property investing that is genuinely work. The items below are the ones peculiar to this kind of building; the general list further down applies to any of them. The easy mistake: a clean-looking rent roll. Every item here exists because a signed lease can still sit on top of a problem the seller already knows about.

• Rent roll with actual collected rent, concessions, and delinquency by unit.
• Trailing twelve months of operating expenses, not the seller's pro forma.
• Turnover rate, average days vacant, and make-ready cost per unit.
• Insurance quotes obtained for the buyer, not the seller's expiring premium.
• Property-tax reassessment on sale in that jurisdiction.
• Deferred maintenance survey: roofs, plumbing stacks, electrical panels, parking.
• Local rent regulation, eviction procedure and notice requirements.
• Crime and code-enforcement history, and any outstanding violations.

1. Rent roll Contract rent, tenant by tenant Start from the leases, not from a summary. Each line has a start date, an expiry, an escalation schedule, options, and any free rent or unamortised concession still running. The rent roll is a legal document set, and the estoppel certificates are how a buyer confirms the tenants agree with it.
2. Potential gross income Contract rent + market rent on vacant space + other income + expense recoveries What the property would produce fully leased, including parking, signage, storage, late fees and the reimbursements tenants owe for taxes, insurance and common-area costs. Recoveries are income and the matching expense is an expense — netting them hides the recovery ratio.
3. Effective gross income Potential gross income − vacancy − credit loss − concessions Deduct what will not actually be collected: physical vacancy, tenants who do not pay, and concessions granted. Using an assumed market vacancy rather than the property's own history is one of the most common places a model becomes optimistic.
4. Operating expenses Taxes + insurance + utilities + repairs + management + admin + payroll The cost of running the building for a year. Two lines deserve independent verification rather than acceptance: property taxes, which are frequently reassessed on a sale, and insurance, which is quoted to the buyer and not inherited from the seller. A market management fee belongs here even if the current owner charges none.
5. Net operating income Effective gross income − Operating expenses = NOI The property's own income, before financing and before tax. This is the number that value, cap rate and every lender covenant are calculated from, which is exactly why it is the number most often presented flatteringly.
6. Value and cap rate Value = NOI ÷ Cap rate · Cap rate = NOI ÷ Price One equation used in both directions. Divide NOI by a cap rate to estimate value; divide NOI by a price to see what a deal is being priced at. Because value is derived from NOI, every dollar added to or removed from NOI moves the value by a multiple of itself.
7. Capital items below the line NOI − capital expenditure − tenant improvements − leasing commissions Excluded from NOI by convention, but paid in cash. Roofs, parking lots, HVAC replacement, fitting out space for a new tenant and the commission that won the lease all come out of the same account. A reserve for them is the difference between an honest analysis and a brochure.
8. Debt service Cash flow before tax = NOI − annual debt service (− capital items) Interest and principal on the loan. This is where DSCR is tested, where the loan constant decides whether leverage is adding to or subtracting from cash flow, and where a covenant breach can divert income into a lender-controlled account before the owner sees it.
9. After tax Taxable income = NOI − interest − depreciation ± other adjustments Cash flow and taxable income are different numbers. Depreciation is deducted though no cash left, principal repayment is cash out though it is not deductible, and the resulting loss may be suspended under the passive activity rules rather than used. At sale, recapture and gain settle the difference.

If the appeal is the rent rather than the building, this is the same mechanism without the diligence list above: a listed company owns the properties and distributes most of what it collects. Two caveats: this list is not filtered to the property type on this page — most of these landlords own several kinds — and the yield shown is a percentage of the share price rather than of any building's value.

Prices as of Aug 25, 2026.

The same list of listed net-lease landlords that appears on the section hub, ordered by our income score and then by yield, highest first, and not filtered to this property type — most of these REITs own several. Price comes from the daily quote pipeline; the distribution yield and annual rate are forward figures from the last regular distribution and its frequency, not the cash paid over the last twelve months. The caveat: this is a yield on a share price, not the cap rate on the buildings underneath it.

This section is a structural reference, not investment, tax or legal advice, and nothing in it recommends buying, selling or financing any property. It contains no market quotes: no current cap rates, rents or prices, because those are negotiated privately and are not publicly quotable. Tax rules described here are general US federal mechanisms that change with legislation, and state and local rules differ. Verify anything that matters with an attorney, an accountant and an appraiser who know the specific property and jurisdiction.