The CRE Underwriting Checklist (Multifamily, Industrial & IOS)

A checklist isn't a substitute for judgment — it's what keeps judgment from skipping a line. The deals that go wrong rarely fail on the headline number; they fail on a reserve that wasn't subtracted, an exit cap that was never stressed, or a lease clause nobody abstracted. Here is the working checklist, top to bottom: the universal blocks that apply to every commercial deal, then the asset-specific items for multifamily, industrial, and IOS.

The universal checklist (every CRE deal)

1. Income — from asking rent to what you actually collect

• Tie income to the actual rent roll or lease, not the offering memorandum's stabilized number.
• Start from gross potential rent; mark to market only where comps support it.
• Subtract physical vacancy and credit loss at the submarket's real rate, not a stylized 5%.
• Add other income (reimbursements, parking, fees) — and verify it's recurring, not one-time.
• Land on effective gross income, the income you can actually bank.

2. Expenses — build them up, don't ratio them down

• Build operating expenses from real line items (taxes, insurance, management, R&M, utilities, payroll), not a flat expense ratio.
• Re-underwrite property taxes for a post-sale reassessment — the single most common understatement.
• Include a realistic replacement reserve. Brokers often omit it; lenders never do.
• Sanity-check the result against a typical operating expense ratio for the asset and vintage.

3. NOI and value — separate the broker cap from the true cap

• Compute NOI two ways: pre-reserves for valuation and cap-rate comparison, post-reserves for cash-flow returns.
• Quote the going-in cap rate on the same basis as the comps you're comparing to.
• Surface the gap between the broker cap and the true cap — run it in the cap rate calculator.
• Confirm value reconciles to comparable sales, not just NOI ÷ a hoped-for cap.

4. Financing — clear every lender test

• Run DSCR on the fully-amortizing payment, not just the interest-only period — check it in the DSCR calculator.
• Identify the binding constraint: LTV, DSCR, or debt yield — whichever sizes the smallest loan wins.
• Stress the rate: re-run DSCR and proceeds 75–100 bps higher than the quote.
• Confirm the capital stack closes — see the full capital stack and any mezzanine or preferred layers.

5. Returns and exit — where over-optimism hides

• Compute cash-on-cash, IRR, and equity multiple — read all three together.
• Stress the exit cap: assume it's at least as high as your going-in cap. Modeling compression is a thesis, not a base case.
• Check how much of the return rests on the sale vs in-place cash flow — a high IRR with no cash flow is a warning.
• Run a sensitivity analysis on exit cap, rent growth, and hold period to find the assumption the deal hinges on.

Multifamily addendum

• Abstract the rent roll unit by unit; confirm loss-to-lease is real and not already priced in.
• Separate the two value levers: free loss-to-lease vs capital-hungry value-add, each underwritten on its own return-on-cost.
• Verify the expense ratio isn't suspiciously low (overstated income or understated costs).
• For value-add, model in-place and stabilized states separately with renovation cost, downtime, and a comp-supported premium.
• Full walkthrough: how to underwrite a multifamily deal. Quick math: multifamily pro forma calculator.

Industrial / single-tenant NNN addendum

• Abstract the lease: term, escalators, renewal options, and exactly which costs are the tenant's vs yours.
• On a "NNN" deal, net out the landlord costs that aren't passed through — the true cap is almost always below the headline.
• Underwrite the tenant's credit and rent coverage (EBITDAR ÷ rent); on a sale-leaseback the rent is negotiated, so coverage matters more than the cap rate.
• Track how escalators move coverage down over the term against flat tenant earnings.
• Check building functionality: clear height, dock doors, and power.
• Full walkthroughs: how to underwrite a small industrial deal, single-tenant credit analysis. Quick math: NNN lease analyzer.

IOS (industrial outdoor storage) addendum

• Value on rent per acre, not price per square foot; confirm rent against in-place, defensible comps.
• Compute the true land yield (net rent ÷ price), not the broker's gross-rent yield — run it in the IOS land yield calculator.
• Verify zoning and entitlements: by-right vs conditional use, and whether the use could lapse.
• Assess the surface, fencing, power, and access — a paved, secured, powered yard is a different asset than a gravel lot.
• If it's a covered-land play, confirm the storage income covers carry through the intended hold.
• Full walkthrough: how to underwrite an IOS deal.

Use the checklist, then let the model run it

Working a single deal, this checklist is a discipline. Working a pipeline, it's a bottleneck — which is the whole reason underwriting software exists. UpsideIQ runs every item above automatically — true cap throughout, real reserves, a fully-amortizing DSCR, a stressed exit, IRR and equity multiple, and a graded deal score — for multifamily, industrial, and IOS, free to start. The checklist tells you what to verify; the model verifies it every time.