REAL ESTATE GUIDE
Value-Add Real Estate Underwriting
Value-add underwriting separates in-place operations from renovation, lease-up and stabilized exit assumptions.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
Start with the current rent roll, vacancy, expenses and near-term capital needs. Do not value the asset only on the stabilized case.
Calculation framework
Phase renovation by unit or area, downtime, leasing cost and rent uplift. Track how quickly invested capital converts into incremental NOI.
Underwriting review
Model acquisition debt, capex funding, covenant headroom and the stabilization refinance or sale. Timing slippage can materially increase equity.
How to use the result
Compare unleveraged and leveraged returns, yield on incremental cost, stabilized value and a downside case with slower execution and lower rent.