just wondering which one you never take the sellers word on

A deep value-add opportunity in Atlanta. For details please email me [email protected]. Thanks!

I have a small multifamily property under contract and am seeking a capital partner. The deal is producing 11–12% in-place returns, light value-add renovation (contractor pricing already in hand). Capital raise is approximately $250K for the acquisition. Feel free to DM me for details.

Recourse vs non-recourse debt is a crucial concept for multifamily investors and newer syndicators to understand. If you buy a 50-unit deal with a recourse loan and it goes sideways, you could lose the property and still owe the bank money. If you buy that same deal with a non-recourse loan and it fails, you lose the property, but the lender generally cannot come after your personal assets. That one distinction has massive implications for overall risk mitigation (or lack there of it) across your investment portfolio. Recourse Loans A recourse loan means you personally guarantee the debt. If the property cannot cover the loan balance, the lender can pursue your personal assets to make up the difference. Why lenders like it: • Lower risk to them • Often easier approval for smaller or newer sponsors • Sometimes slightly better pricing Why it is risky for you: • Your personal balance sheet is exposed • Higher psychological pressure • One bad deal can affect everything Non-Recourse Loans A non-recourse loan limits the lender’s recovery to the property itself, assuming no fraud or “bad boy” carveouts. Why sponsors prefer it: • Your personal assets are protected • Cleaner risk separation • More scalable for syndicators Why it can be harder: • Stronger deal metrics required • Experienced sponsorship often expected • May carry slightly stricter structure When each is typically used: Recourse is common in: • Smaller multifamily deals • Community bank financing • First or second deals for new operators • Bridge loans where lenders want extra security Non-recourse is common in: • Agency debt through Fannie Mae or Freddie Mac • Larger stabilized multifamily • Institutional or repeat sponsors • Deals with strong DSCR and occupancy For syndicators, this decision is not just about gunning for lower rates or closing the deal, it's about risk allocation. Are you comfortable tying your personal net worth to the outcome? Or are you building a structure where risk is primarily contained within the asset?

(EM, IRR, CoC, and Annualized Return) When I began underwriting, and even many times today, I had to ask my mentor(s) what each of the metrics meant on our underwriting tool. Why were they so excited about cash on cash (CoC) for one deal, but more focused on the equity multiple (EM) on another? Why would they discuss annualized return more often for some equity groups and CoC or EM for others? I still ask a lot of questions about this today even after underwriting $300M+ worth of multifamily (this may seem like a lot to some people, and a tiny amount to others, just the way multifamily investing works). A few things I have found about these deal metrics (and even some other metrics I won't go into on this post, trended and untrended yield on cost (just got taught this one recently)) is the following: 1. They tell slightly different performance and health metrics about a deal 2. They matter more to some sponsors, LPs, and private equity groups than others based on their risk tolerance, desire to redeploy their capital, and expectations for their equity (whether it is from them or the decision makers behind the scenes). 3. They compliment one another. Much like doing your blood work when you go to the doctor. You wouldn’t check your cholesterol only and call it a day. You normally pull a comprehensive blood panel to ensure you’re functioning well from head to toe. For each metric mentioned above I am going to break down what it tells me about a deal, how it is objectively calculated, a quick example, and what people are looking for when this is their key metric. While you read this, if you think of questions that go unanswered please throw them in the comments and I will do my best to answer them or write about them in future posts. 1️⃣ Cash on Cash (CoC): Cash on cash is calculated as annual cash flow: Cash on Cash (%) = (Annual Net Cash Flow / Total Invested Equity) * 100 Example: You invest $1M in a multifamily deal (for the ease of calculation we are going to assume you are the sole investor, and discuss NET cash flow as a 1 time number even though distributions are often paid monthly). Over the first year the NET cash flow is $80k (meaning this amount is freed up to be distributed to investors/yourself, or reinvested into the deal).