What Makes a Good Multifamily Deal in 2026

A seller called recently and asked a question I hear all the time: "Do we even qualify? Will you look at our building?"

The answer is: we look at everything in our buy box. Whether the deal actually works depends on whether the math clears and whether the physical reality matches what the seller describes. This post is a full breakdown of the criteria we use when underwriting a 5-to-50-unit multifamily property in 2026, so you know exactly where the bar is before we talk.

What Is Kallpa's Multifamily Buy Box?

We buy 5-to-50-unit multifamily properties in Wichita, KS, Washington State, and Texas. The target asset class is B/C, post-1960s vintage, workforce housing. Worn buildings serving working families, not trophy assets.

We do not buy single-family homes, commercial retail, or raw land. We do not partner on ground-up construction. We acquire existing apartment buildings. Duplexes and triplexes occasionally fit when they are part of a larger owner's portfolio sale, but the multifamily focus is consistent.

One thing that comes up often: we are a direct buyer, not a wholesaler. When you contact Kallpa, you reach the person who signs the LOI. There is no assignment, no daisy chain, no middleman getting paid between us and the seller. For sellers, that means our timeline is real and our offer stands on its own terms.

What Financial Numbers Need to Work?

The financial screen is where most deals land or fall apart. When we underwrite a Kansas or Washington multifamily property, we look at four metrics in roughly this order.

Cap rate on actual rents. We underwrite to a going-in cap rate of 7-9% for Wichita B/C-class assets, based on actual collected rents over the trailing 12 months. Not the seller's pro-forma. Not the market rent projection. The T-12 income. See our neighborhood-by-neighborhood cap rate data for Wichita to understand how much submarket matters to the final number.

A property priced at a 5.5% cap rate on projected rents, when the actual T-12 puts it at 6.8%, needs to be repriced to 6.8% before the conversation goes anywhere. We do not underwrite to potential.

Debt service coverage ratio. At 2026 interest rates, we underwrite to a minimum DSCR of 1.20x on agency-eligible financing and 1.15x on DSCR bridge products. For every $1.00 of annual debt service, the property must generate at least $1.20 of net operating income. At a 75% LTV and a 30-year amortization at current rates, that floor effectively sets the ceiling on what we can pay.

Here is an illustrative example (not a specific transaction; the mechanics are real): a 12-unit Wichita property collects $8,400 in monthly gross rents, with trailing 12-month occupancy at 90%. Annual gross collected: $90,720. With a 45% expense ratio (standard for Kansas B/C class), NOI is roughly $49,900/year. At a 7.5% cap, that values the property at approximately $665,000. Financed at 75% LTV ($499,000 loan) at 7.0% for 30 years, annual debt service is roughly $39,900. DSCR: $49,900 / $39,900 = 1.25x. This deal works at $665,000. Push the price to $800,000, the cap rate drops to 6.2% and DSCR falls below 1.10x. We would not finance that deal at conventional terms.

Cash-on-cash return. We target 8-10% cash-on-cash return in the first year of stabilized operation. A well-maintained, fully stabilized building at 8% CoC is fine. A building with a $150,000 capital need in year one at 8% CoC is not, because the capital requirement reduces the effective first-year return to near zero. See how cap rate and cash-on-cash differ and when each number matters most.

Gross rent multiplier as a quick filter. Before running full underwriting, we look at GRM (price divided by annual gross rents). For Wichita B/C, our quick filter is a GRM of 9-11x on actual rents. A property asking a 14x GRM is priced for a different buyer. This is not a hard cutoff, but it tells us in 30 seconds whether full underwriting is worth the time.

How Does Physical Condition Factor Into Our Offer?

We buy as-is. Sellers do not need to make repairs before closing. But condition directly shapes price, and here is how we think through it.

When we walk a building, we assess three distinct categories.

Priced-in deferred maintenance. Roof approaching end of life, aging HVAC units, cosmetic unit turns needed. These are real capital expenditure items we model and deduct from value. A $60,000 roof replacement projected in year two means we model that $60,000 as a year-two outflow and offer accordingly. We do not ask sellers to fix roofs before closing. We ask them to price the roof into the deal.

Physical deal-killers. Active foundation movement, structural failures, fire damage not properly remediated, mold from ongoing water intrusion. These are not priced-in items. They are pass conditions. We walk from buildings where the physical risk cannot be underwritten at any price we can defend to a lender. See how we build out the physical side of underwriting on a Kansas multifamily deal.

Environmental. Any Phase I environmental site assessment finding that leads to Phase II investigation is a pass unless the seller has a documented remediation plan and the asking price reflects the liability. Environmental contamination on a $700,000 building is not a math problem we can model through.

On mechanical systems: we assess roof age, HVAC condition, water heater vintage, plumbing type (copper, galvanized, PEX), and electrical service capacity per unit. These items do not kill deals by themselves, but they set the year-one through year-five capital expenditure budget, which feeds directly into the offer price.

What Deal-Killers Cause Us to Walk?

Most properties we review do not fail the financial screen. They are disqualified by one of these four issues.

Unpermitted additions. A garage converted to a studio unit without permits, a basement dwelling added after original construction. Kansas municipalities have limited patience for retroactive permitting on habitable unpermitted space. If the unpermitted space represents a meaningful share of the unit count, it is usually a pass. We cannot buy a six-unit building where two of the six units are legally unrecognized.

Title clouds. Mechanics' liens, federal or state tax liens, delinquent property taxes beyond two years, heir disputes from estate situations. We buy with tenants in place and close cleanly. A property where title will not clear at closing is not a property we can close on. Sellers who know about title issues should surface them at first contact, not at the closing table.

Seller pricing based on pro-forma rents. This is the most common friction point. A seller who put significant capital into improvements and markets the building based on projected rents is pricing it as if those improvements are complete and fully leased. If the actual trailing income does not support the price, the math does not work, regardless of the seller's cost basis.

Occupancy manipulation. We see this occasionally: a property that was 55% occupied several months ago, now showing 95% because the seller filled units quickly before marketing. We pull the T-12 and look at the occupancy trend. A sudden jump in the six months before marketing gets underwritten at the historical average, not the current snapshot.

How Does the Wichita Market Shape What We Pay?

Wichita is a workforce housing market. According to U.S. Census Bureau data, median household income in Sedgwick County runs approximately $58,000-60,000. Renters in the B/C apartment segment typically spend 28-33% of gross income on housing, which puts effective rents in the $950-1,400/month range for two-bedroom units across most Wichita submarkets.

That market reality has two direct effects on how we underwrite.

First, rent growth is moderate. We do not model 6-8% annual rent increases for Wichita workforce housing. Actual rent growth in this segment has tracked closer to 3-4% annually, in line with local wage growth. Deals that require aggressive rent growth assumptions to pencil do not work at any price we can support.

Second, vacancy sensitivity is real. In well-located Wichita submarkets, a two-bedroom unit vacant for 45 days will lease. A unit with major deferred maintenance in a weaker submarket may sit for 90-120 days. We model realistic vacancy by submarket rather than applying a blanket 5% assumption. Buildings in transition neighborhoods get a higher vacancy load in our underwriting, which reduces NOI and therefore the offer price.

When Does the Deal Work for Both Sides?

A deal works when the seller's net-to-seller expectation aligns with what the math can support. That covers a lot of ground.

Sellers with little or no debt who have owned a building for 15-20 years often have the most room to maneuver. A 7.5% cap rate offer may net them $600,000-800,000 in cash at closing on a building they paid $200,000 for years ago. No listing commission, no repair requests, no 90-day MLS campaign, no appraisal contingency. That net-to-seller comparison often lands better than the seller expects before we run the numbers together.

Sellers with equity and a tax concern are often the best candidates for seller financing. We pay a higher price in exchange for seller carry at a rate below conventional financing, which spreads the seller's recognized gain over years rather than triggering a full recapture hit at closing. See how the seller financing math works on a Wichita 16-unit example, including the note terms and amortization structure we typically propose.

Sellers who need certainty and speed are often the cleanest fit. Estate settlements, tax deadlines, landlords who have been managing problem tenants for years and need to be done. We close in 14 to 45 days when the title is clean and the underwriting holds.

Sellers with price expectations 25-30% above what the rent roll supports rarely end up closing with us. Not because we won't negotiate, but because the gap is a math problem, not a negotiating problem. A $100,000 negotiation gap on a $700,000 building is workable. A $200,000 gap on a $600,000 building is a fundamental disagreement about value that no term structure we can offer will bridge.

If you want to know where your property lands in this framework, send us the basics: address, unit count, current rent roll, and trailing 12 months of income and expense. We respond within one business day with a real answer.

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