82-Unit Value-Add Deal in Roanoke, VA — Would Appreciate Input

[Victor Minaya]

Currently analyzing an 82-unit value-add opportunity in Roanoke, VA and would appreciate input from experienced multifamily operators/investors.

Deal Snapshot:

• Purchase Price: ~$10.9M (actively negotiating closer to ~$10M)  
• Current NOI: ~$724K
• Cap Rate: ~6.4%  
• Occupancy: 90% (with several units previously offline impacting in-place income)  
• Unit Mix: Combination of townhomes + apartments  
• Value-Add: Interior upgrades ($6K–$10K/unit) + operational improvements  

What I’m seeing so far:

• Clear gap between current income and stabilized performance  
• Renovated units projected to push rents into ~$1,500–$1,600+ range (market supports higher in some cases)  
• Some of the 2025 performance appears impacted by units taken offline for renovations rather than true demand issues  
• Expense side appears relatively stable outside of normal repairs & maintenance  

Current Focus:

• Stress-testing rent assumptions vs. tenant base and market reality  
• Evaluating true economic occupancy vs. physical occupancy  
• Building out the right GP team (KP, capital partners, etc.)  
• Structuring the deal to support both cash flow and long-term refi potential  

Would appreciate feedback from those with experience in similar deals:

1. What would you stress-test the most here?  
2. Any red flags you’d dig deeper into before moving forward?  
3. At what price would this start to make sense for you given the current numbers?  

Always open to connecting with others active in multifamily as well.

Update after feedback from experienced operators:

Based on some great input, I’m digging deeper into a few key areas:
– Validating current rents vs. true achievable market rents post-renovation
– Reassessing the $6k–$10k/unit CapEx to ensure it actually supports rent growth
– Analyzing supply/demand in the submarket (new deliveries, tenant base, etc.)
– Stress-testing financing assumptions, especially around potential negative leverage early on

Would appreciate any additional insights from those who’ve operated similar value-add deals.

[Evan Polaski]

@Victor Minaya:

There is a lot that goes into this DD. But based on the info you provided key items to stress test/look into, which will likely lead to more detailed questions:

High level thoughts:
Your renovation budget is extremely light.  $10k/door does not get you much, and therefore can be hard to push rents.  I.e. trading old wood cabinets, for old wood cabinets with a coat of paint on them doesn't move rent much, typically.  

You don't mention where rents are today, so you need to make sure there is adequate movement in rents to offset the renovation costs.

Then you get to tenant demand.  What is supply looking like in area?  Does the demographics of the area support your pushed rents?  Are the "newer" apartments on waitlists, while the old ones have are sitting struggling?

Noted above: what does the supply side look like?  Is there new construction soon to be coming online that will limit your demand for a while? 

Financing Options: what are you borrowing at?  Are you in negative leverage until you can raise rents? 

While I can't speak to this deal in particular, since there are a lot of missing pieces of information, the common areas these deals fail is:
In recent years, financing structure.  Floating rate loans, specifically.  

Unforeseen, or un-budgeted Capex, often tied to cutting capex budgets to make deal work and/or only budgeting for a 3-5 yr hold, but stuck holding 7-10 yrs. So, the buyer can't pass the buck, and needs to handle the capex.

Knowing tenant demand.  I have seen some people over-improve units, when they could have pushed rents without doing much more than some paint touchup and good cleaning.  I have also seen people not be able to move rents at all, because their "upgrades" didn't go far enough.