How Avanta evaluates an apartment deal.

Most apartment deals are sold on a projection and a flattering photograph. We begin somewhere less exciting and far more useful: what has to be true for this investment to survive a bad year? Everything below flows from that question. It is the discipline that lets roughly nineteen of twenty properties we study fall away — and lets the survivors reach you already stress-tested.

1. Start with the downside

Before we let ourselves imagine the upside, we build the worst case. A property that only works if everything goes right is a bet, not an investment. Why we underwrite the downside first →

2. Verify every number against the record

A seller’s pro-forma is a sales document. We rebuild the income and expenses from public records and actuals, and when the two disagree, we trust the record and adjust our price. Why the county record beats the pro-forma →

3. Test whether it survives

Two numbers tell us how much punishment a deal can take: its debt-service coverage and its break-even occupancy. Comfortable margins are the difference between “wait longer” and “lose money.” DSCR, explained → · Break-even occupancy →

4. Judge the operator and the alignment

In a passive deal you are trusting a sponsor for years. We hold ourselves to the same test we would put to anyone else — track record, real co-investment, and a fee-and-waterfall structure that pays the sponsor only after investors are made whole. How to vet an operator → · Fees and the waterfall →

The bar every deal must clear

Only after all of that do we measure a deal against our five return hurdles — and every one must pass in the base case, on numbers we have verified, with the downside already modeled. If it clears, it earns a place in front of our investors. If it does not, it goes in the rejection log — which, as much as any purchase, is the product.