Using Claude Cowork to Underwrite a Deal in 10 mins.

[Carl Mcknight]

How I Underwrote a 47-Unit Value-Add Deal in 10 minutes using Claude Cowork Agent — Full Breakdown

I recently ran a full deal analysis on a 47-unit multifamily property up in Kentucky, and I wanted to share the complete breakdown — the good, the bad, and the red flags — because I think it provides a decent example of how to evaluate a value-add deal. And using AI, it can really save you a lot of time on your deal analysis. I think back to just a year ago, if not less, and all this data entry would easily take a few hours, or days if your waiting on a Broker to call you back or answer an email regarding the deal.

If you don't have any Broker relationships to where they are sending you deals, you can go on Crexi, or LoopNet or any other site and search for what you are looking for, download the Offering Memorandum, T12 and Rent Roll (if available), and upload it to your AI Agent and start vetting the deal.

This is a Class C workforce housing property built in 1972. All utilities are landlord-paid. Current occupancy sits at 74.5%. The seller hasn't publicly disclosed an asking price. Here's how I approached it.

The Property at a Glance

• Units: 47 (16 Studio/1BA · 20 One-Bed/1BA · 11 Two-Bed/1BA)
• Year Built: 1972 · 2-story
• Class: C — workforce housing, aging but functional
• Utilities: ALL landlord-paid (gas, electric, water, sewer, trash)
• Physical Occupancy: 35 of 47 units = 74.5%
• Current Monthly Rent (occupied): $28,000/month
• State: Kentucky

The Market

The property sits in a small but stable Kentucky market with a population of roughly 14,300 and steady 1.4% annual growth. The AI Agent broke down the crime rate (very low), and the lack of affordable housing in the area, and comparable properties for rent. It also researched the current vacancy rates.

This is an undersupplied workforce housing market, which creates a favorable backdrop for lease-up.

The below comes from the AI Agent reviewing the Offering Memorandum, T12 (Trailing 12 Months Income), and the Rent Roll.

The T12: What the Numbers Actually Say

Total T12 Income: $314,622

The income side is straightforward. Rental income came in at $296,722, with the remainder from late fees, EFT convenience fees, utility reimbursements, and misc income. Nothing alarming.

The expense side is where it gets interesting.

The as-stated NOI from the seller shows $161,691. When I normalized the expenses, here's what I found:

Biggest adjustment: Management fees. The T12 shows management fees in only 5 of 12 months — dropping to $0 from July through December 2025. That's a red flag. Either the property switched to self-management mid-year, or the owner stopped recording the fee. Either way, you have to normalize it. At 8.5% of EGI, that's $26,743/year — versus only $12,107 actually recorded. That single adjustment accounts for the majority of the normalization difference.

	As-Stated	Normalized
Total Income	$314,622	$314,622
Total Operating Expenses	($129,500)	($145,679)
Property Taxes	($23,431)	($23,431)
True NOI	$161,691	$147,055
Expense Ratio	48.7%	53.7%

Utilities are the other major exposure. The landlord pays ALL utilities — $57,597/year across 47 units. That's $1,225/unit/year. If you buy this and bring in higher-consumption tenants, your costs go up with no offsetting revenue. RUBS (Ratio Utility Billing System) implementation is the play here, and I'll get to that in the value-add section.

The Rent Roll: Where the Real Upside Lives

Current occupancy of 74.5% breaks down like this:

Unit Type	Total	Occupied	Vacant	Avg Rent
Studio/1BA	16	9	7	$691
1 Bed/1BA	20	18	2	$858
2 Bed/1BA	11	8	3	$791
Total	47	35	12	$800

The studio section is the story. 7 of 16 studios are vacant — 43.8% vacancy in that unit type alone. That's your primary management challenge and your primary upside lever.

Loss to Lease (Below-Market Occupied Units)

Eight occupied units are paying significantly below market:

• Unit 8: $465/month vs. $750 market (Studio) — 38% below market
• Unit 34: $650/month vs. $905 market (2BR)
• Unit 35: $600/month vs. $905 market (2BR)
• Unit 43: $635/month vs. $905 market (2BR)
• Plus four more units ranging 10–18% below market

Total annualized loss to lease from occupied below-market units: $23,040/year — recoverable as leases expire or units turn.

The AI Agent caught the below also. I new this from the build year from having owned older properties, but it was nice to see the AI Agent caught it without me having to suggest it.

CapEx: Don't Skip This on a 1972 Build

A 53-year-old building requires full capital planning. Pre-1975 reserve tables call for $1,800–$2,500/unit/year. Before earnest money goes hard, I'd want inspections on all of the following:

Critical (must know before going non-refundable):

• Plumbing system — galvanized pipe is common in 1960s–70s Kentucky construction. Full replacement can run $50,000–$100,000+. This is the single largest unknown.
• Roof — unknown condition, $15,000–$30,000 to replace (most likely more)
• Electrical panels — likely updated but verify

High priority:

• HVAC per unit: $4,000–$6,000/unit if replacement needed (would need to confirm if Central Air, or window units)
• 7 vacant studios need cosmetic turns: ~$2,000–$5,000 each

Year 1 CapEx budget I used: $100,000 funded at closing.

The studio turn math is compelling on its own: turn all 7 at $3,500 average = $24,500 investment to unlock $63,000/year in new gross revenue. That's a 257% first-year ROI on that capital alone.

The Value-Add Stack

Here's the full upside picture if you execute all levers:

Lever	Annual NOI Impact
Fill 7 vacant studios @ $750/mo	+$63,000
Fill 2 vacant 1BRs @ $880/mo	+$21,120
Fill 3 vacant 2BRs @ $905/mo	+$32,580
Bring 8 below-market units to market	+$21,912
RUBS utility billing @ $75/unit/mo	+$42,300
Total Potential Upside	+$180,912/yr

Not every lever executes simultaneously. My conservative stabilized NOI (90% occupancy, market rents, no RUBS) is $221,857/year. With RUBS, it reaches $264,157/year.

At a 9% cap rate, stabilized value = ~$2,465,000. Against a target purchase price of $1,475,000, that's nearly $1,000,000 in value creation.

The AI Agent also caught the below which some investors may not have thought about.

The RUBS Problem Nobody Talks About

RUBS looks great on paper, I see multiple deals per month where the Broker is using that as a major value add. I’m not saying it doesn’t work, but take into consideration the following which the Agent brought up: Recover $42,000–$47,000/year in utility costs from tenants, slash your largest expense category, add $470,000+ in stabilized value at a 9% cap. It's one of the most cited value-add levers in multifamily underwriting — and it deserves real scrutiny before you run it as a given.

Here's the issue with this specific deal: the current market rents for this property are $750/month for studios, $880 for one-beds, and $905 for two-beds. Those are the rents I've been using as the stabilized target. But those market rents are almost certainly already priced to include utilities — because that's how this market rents. Every comparable in a Class C workforce housing market like this factors in what tenants actually pay all-in.

When you implement RUBS and start billing tenants $60–$90/month in utility charges on top of their rent, you haven't just added income. You've effectively raised their all-in monthly cost to $810–$840 for a studio, $940–$970 for a one-bed, $965–$995 for a two-bed. At that point, you're no longer competitive with the market. You're asking tenants to pay above what similar units in the area cost — and in a Class C workforce housing property, you don't have the amenities or finishes to justify a premium.

The real risk: RUBS-driven vacancy. If tenants balk at the new all-in cost and start leaving — or if you can't fill vacancies because your effective rent is above market — you've traded a utility expense reduction for an occupancy problem. And an occupancy problem at a 47-unit property with 1972-era bones and already 74.5% physical occupancy is a much bigger issue than $57,000 in annual utility costs.

How to think about it correctly:

There are really two ways RUBS works in your favor here, and they aren't the same thing:

1. If you implement RUBS AND lower base rents to compensate — tenants pay the same all-in, you just shift the cost structure. Your utility expense drops but your rental income also drops. The NOI improvement is real but smaller than the raw RUBS number suggests.
2. If comparable properties in the market have already shifted to tenant-paid utilities — and yours is one of the last to do it — then adding RUBS actually doesn't push you above market. It brings you in line with it. In that case, the full $42,000–$47,000 recovery is legitimate upside.

The due diligence question that changes everything: Are competing properties in this market charging utilities separately, or are they all-inclusive? If the comps are all-inclusive, RUBS is a retention risk. If the comps have already shifted to tenant-paid, RUBS is a free $470,000 in value creation.

I underwrote this deal conservatively — stabilized NOI of $221,857 with no RUBS. The RUBS upside is real, but I'm treating it as a bonus if the market supports it, not a lever I'm counting on to make the deal work.

Offer Strategy

Because the property is at 74.5% occupancy, conventional/agency financing isn't available yet. The right vehicle is a bridge loan (I modeled 65% LTV at 7.0% IO), with a plan to refinance to conventional debt after stabilization.

	Opening	Target	Walk-Away
Price	$1,350,000	$1,475,000	$1,600,000
Price/Unit	$28,723	$31,383	$34,043
Cap Rate (Norm NOI)	10.89%	9.97%	9.19%
Cash-on-Cash (Yr 1)	12.9%	11.3%	9.8%
DSCR	2.39×	2.19×	2.02×
Total Equity Required	$664,500	$710,750	$757,000

5-Year Projection (at Target Offer):

• Year 3 refinance returns ~$597,000 of original $710,750 equity invested
• 5-year total distributions + exit: ~$1,886,000
• Equity multiple: 2.65×
• Estimated IRR: ~29–31%

The Verdict

This is a compelling value-add deal — but not without real risks.

Green lights: Strong market fundamentals, excellent safety profile, below-market entry price, multiple independent upside levers, strong DSCR even at current occupancy.

Red flags to resolve in due diligence:

1. Why did management fees go to $0 in H2 2025? Is this self-managed and operationally stressed?
2. Plumbing — is it galvanized? That answer alone could change the deal.
3. Studio vacancy — is it condition-related, pricing-related, or demand-related?

The deal works at $1,475,000 if the inspection comes back clean and the studio vacancy is a management problem (not a demand problem). If the plumbing is galvanized, you're looking at a $50,000–$100,000 budget revision and a renegotiated price.

Some of you may already be using AI to assist you in your deal analysis, if not though, I would encourage you to give it a try. Also, I mainly use Claude Code, its seems to keep getting upgraded each month to where it is smarter and faster than the month before. As a side note, AI isn’t perfect (at least not right now), but it’s helped me save a lot of time vetting deals that on their face value look promising. One thing to note about this deal, is the suggested purchase price seems very low in my view, but the AI is looking at it from a black and white view, they are not thinking "thats really low per door", the AI is just going off the facts of the numbers and giving a suggestion based upon those facts, no emotions involved whatsoever. 

What would you want to know before pulling the trigger on a deal like this? Drop your questions below.

[James Wilcox]

Quote from @Carl Mcknight:

How I Underwrote a 47-Unit Value-Add Deal in 10 minutes using Claude Cowork Agent — Full Breakdown

I recently ran a full deal analysis on a 47-unit multifamily property up in Kentucky, and I wanted to share the complete breakdown — the good, the bad, and the red flags — because I think it provides a decent example of how to evaluate a value-add deal. And using AI, it can really save you a lot of time on your deal analysis. I think back to just a year ago, if not less, and all this data entry would easily take a few hours, or days if your waiting on a Broker to call you back or answer an email regarding the deal.

If you don't have any Broker relationships to where they are sending you deals, you can go on Crexi, or LoopNet or any other site and search for what you are looking for, download the Offering Memorandum, T12 and Rent Roll (if available), and upload it to your AI Agent and start vetting the deal.

This is a Class C workforce housing property built in 1972. All utilities are landlord-paid. Current occupancy sits at 74.5%. The seller hasn't publicly disclosed an asking price. Here's how I approached it.

The Property at a Glance

• Units: 47 (16 Studio/1BA · 20 One-Bed/1BA · 11 Two-Bed/1BA)
• Year Built: 1972 · 2-story
• Class: C — workforce housing, aging but functional
• Utilities: ALL landlord-paid (gas, electric, water, sewer, trash)
• Physical Occupancy: 35 of 47 units = 74.5%
• Current Monthly Rent (occupied): $28,000/month
• State: Kentucky

The Market

The property sits in a small but stable Kentucky market with a population of roughly 14,300 and steady 1.4% annual growth. The AI Agent broke down the crime rate (very low), and the lack of affordable housing in the area, and comparable properties for rent. It also researched the current vacancy rates.

This is an undersupplied workforce housing market, which creates a favorable backdrop for lease-up.

The below comes from the AI Agent reviewing the Offering Memorandum, T12 (Trailing 12 Months Income), and the Rent Roll.

The T12: What the Numbers Actually Say

Total T12 Income: $314,622

The income side is straightforward. Rental income came in at $296,722, with the remainder from late fees, EFT convenience fees, utility reimbursements, and misc income. Nothing alarming.

The expense side is where it gets interesting.

The as-stated NOI from the seller shows $161,691. When I normalized the expenses, here's what I found:

Biggest adjustment: Management fees. The T12 shows management fees in only 5 of 12 months — dropping to $0 from July through December 2025. That's a red flag. Either the property switched to self-management mid-year, or the owner stopped recording the fee. Either way, you have to normalize it. At 8.5% of EGI, that's $26,743/year — versus only $12,107 actually recorded. That single adjustment accounts for the majority of the normalization difference.

	As-Stated	Normalized
Total Income	$314,622	$314,622
Total Operating Expenses	($129,500)	($145,679)
Property Taxes	($23,431)	($23,431)
True NOI	$161,691	$147,055
Expense Ratio	48.7%	53.7%

Utilities are the other major exposure. The landlord pays ALL utilities — $57,597/year across 47 units. That's $1,225/unit/year. If you buy this and bring in higher-consumption tenants, your costs go up with no offsetting revenue. RUBS (Ratio Utility Billing System) implementation is the play here, and I'll get to that in the value-add section.

The Rent Roll: Where the Real Upside Lives

Current occupancy of 74.5% breaks down like this:

Unit Type	Total	Occupied	Vacant	Avg Rent
Studio/1BA	16	9	7	$691
1 Bed/1BA	20	18	2	$858
2 Bed/1BA	11	8	3	$791
Total	47	35	12	$800

The studio section is the story. 7 of 16 studios are vacant — 43.8% vacancy in that unit type alone. That's your primary management challenge and your primary upside lever.

Loss to Lease (Below-Market Occupied Units)

Eight occupied units are paying significantly below market:

• Unit 8: $465/month vs. $750 market (Studio) — 38% below market
• Unit 34: $650/month vs. $905 market (2BR)
• Unit 35: $600/month vs. $905 market (2BR)
• Unit 43: $635/month vs. $905 market (2BR)
• Plus four more units ranging 10–18% below market

Total annualized loss to lease from occupied below-market units: $23,040/year — recoverable as leases expire or units turn.

The AI Agent caught the below also. I new this from the build year from having owned older properties, but it was nice to see the AI Agent caught it without me having to suggest it.

CapEx: Don't Skip This on a 1972 Build

A 53-year-old building requires full capital planning. Pre-1975 reserve tables call for $1,800–$2,500/unit/year. Before earnest money goes hard, I'd want inspections on all of the following:

Critical (must know before going non-refundable):

• Plumbing system — galvanized pipe is common in 1960s–70s Kentucky construction. Full replacement can run $50,000–$100,000+. This is the single largest unknown.
• Roof — unknown condition, $15,000–$30,000 to replace (most likely more)
• Electrical panels — likely updated but verify

High priority:

• HVAC per unit: $4,000–$6,000/unit if replacement needed (would need to confirm if Central Air, or window units)
• 7 vacant studios need cosmetic turns: ~$2,000–$5,000 each

Year 1 CapEx budget I used: $100,000 funded at closing.

The studio turn math is compelling on its own: turn all 7 at $3,500 average = $24,500 investment to unlock $63,000/year in new gross revenue. That's a 257% first-year ROI on that capital alone.

The Value-Add Stack

Here's the full upside picture if you execute all levers:

Lever	Annual NOI Impact
Fill 7 vacant studios @ $750/mo	+$63,000
Fill 2 vacant 1BRs @ $880/mo	+$21,120
Fill 3 vacant 2BRs @ $905/mo	+$32,580
Bring 8 below-market units to market	+$21,912
RUBS utility billing @ $75/unit/mo	+$42,300
Total Potential Upside	+$180,912/yr

Not every lever executes simultaneously. My conservative stabilized NOI (90% occupancy, market rents, no RUBS) is $221,857/year. With RUBS, it reaches $264,157/year.

At a 9% cap rate, stabilized value = ~$2,465,000. Against a target purchase price of $1,475,000, that's nearly $1,000,000 in value creation.

The AI Agent also caught the below which some investors may not have thought about.

The RUBS Problem Nobody Talks About

RUBS looks great on paper, I see multiple deals per month where the Broker is using that as a major value add. I’m not saying it doesn’t work, but take into consideration the following which the Agent brought up: Recover $42,000–$47,000/year in utility costs from tenants, slash your largest expense category, add $470,000+ in stabilized value at a 9% cap. It's one of the most cited value-add levers in multifamily underwriting — and it deserves real scrutiny before you run it as a given.

Here's the issue with this specific deal: the current market rents for this property are $750/month for studios, $880 for one-beds, and $905 for two-beds. Those are the rents I've been using as the stabilized target. But those market rents are almost certainly already priced to include utilities — because that's how this market rents. Every comparable in a Class C workforce housing market like this factors in what tenants actually pay all-in.

When you implement RUBS and start billing tenants $60–$90/month in utility charges on top of their rent, you haven't just added income. You've effectively raised their all-in monthly cost to $810–$840 for a studio, $940–$970 for a one-bed, $965–$995 for a two-bed. At that point, you're no longer competitive with the market. You're asking tenants to pay above what similar units in the area cost — and in a Class C workforce housing property, you don't have the amenities or finishes to justify a premium.

The real risk: RUBS-driven vacancy. If tenants balk at the new all-in cost and start leaving — or if you can't fill vacancies because your effective rent is above market — you've traded a utility expense reduction for an occupancy problem. And an occupancy problem at a 47-unit property with 1972-era bones and already 74.5% physical occupancy is a much bigger issue than $57,000 in annual utility costs.

How to think about it correctly:

There are really two ways RUBS works in your favor here, and they aren't the same thing:

1. If you implement RUBS AND lower base rents to compensate — tenants pay the same all-in, you just shift the cost structure. Your utility expense drops but your rental income also drops. The NOI improvement is real but smaller than the raw RUBS number suggests.
2. If comparable properties in the market have already shifted to tenant-paid utilities — and yours is one of the last to do it — then adding RUBS actually doesn't push you above market. It brings you in line with it. In that case, the full $42,000–$47,000 recovery is legitimate upside.

The due diligence question that changes everything: Are competing properties in this market charging utilities separately, or are they all-inclusive? If the comps are all-inclusive, RUBS is a retention risk. If the comps have already shifted to tenant-paid, RUBS is a free $470,000 in value creation.

I underwrote this deal conservatively — stabilized NOI of $221,857 with no RUBS. The RUBS upside is real, but I'm treating it as a bonus if the market supports it, not a lever I'm counting on to make the deal work.

Offer Strategy

Because the property is at 74.5% occupancy, conventional/agency financing isn't available yet. The right vehicle is a bridge loan (I modeled 65% LTV at 7.0% IO), with a plan to refinance to conventional debt after stabilization.

	Opening	Target	Walk-Away
Price	$1,350,000	$1,475,000	$1,600,000
Price/Unit	$28,723	$31,383	$34,043
Cap Rate (Norm NOI)	10.89%	9.97%	9.19%
Cash-on-Cash (Yr 1)	12.9%	11.3%	9.8%
DSCR	2.39×	2.19×	2.02×
Total Equity Required	$664,500	$710,750	$757,000

5-Year Projection (at Target Offer):

• Year 3 refinance returns ~$597,000 of original $710,750 equity invested
• 5-year total distributions + exit: ~$1,886,000
• Equity multiple: 2.65×
• Estimated IRR: ~29–31%

The Verdict

This is a compelling value-add deal — but not without real risks.

Green lights: Strong market fundamentals, excellent safety profile, below-market entry price, multiple independent upside levers, strong DSCR even at current occupancy.

Red flags to resolve in due diligence:

1. Why did management fees go to $0 in H2 2025? Is this self-managed and operationally stressed?
2. Plumbing — is it galvanized? That answer alone could change the deal.
3. Studio vacancy — is it condition-related, pricing-related, or demand-related?

The deal works at $1,475,000 if the inspection comes back clean and the studio vacancy is a management problem (not a demand problem). If the plumbing is galvanized, you're looking at a $50,000–$100,000 budget revision and a renegotiated price.

Some of you may already be using AI to assist you in your deal analysis, if not though, I would encourage you to give it a try. Also, I mainly use Claude Code, its seems to keep getting upgraded each month to where it is smarter and faster than the month before. As a side note, AI isn’t perfect (at least not right now), but it’s helped me save a lot of time vetting deals that on their face value look promising. One thing to note about this deal, is the suggested purchase price seems very low in my view, but the AI is looking at it from a black and white view, they are not thinking "thats really low per door", the AI is just going off the facts of the numbers and giving a suggestion based upon those facts, no emotions involved whatsoever. 

What would you want to know before pulling the trigger on a deal like this? Drop your questions below.

@Carl Mcknight One thing that stood out to me was the relatively low occupancy rate despite the landlord covering utilities. You mentioned this as well, but properties with utilities included usually see stronger occupancy, even with smaller unit sizes.

It might be worth looking into whether the studios could easily be converted into one bedroom units. I’d also check whether the rents are priced too high for the market or if the units may need some updating. Those factors could be contributing to the lower occupancy but with workforce housing if clean, functional, and priced right there shouldn't be any problems with keeping units filled.