5 DFW multifamily deals analyzed: only 1 cash-flows with leverage

Real Estate Deal Analysis & Advice
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5 DFW multifamily deals analyzed: only 1 cash-flows with leverage

Grant Ellison
Member since 2026 · 16 posts · 3 votes

UPDATE: I ran 5 more DFW deals as promised (see:  https://www.biggerpockets.com/forums/88/topics/1280740-i-bui...). Here's what the reports found.

First, thank you to everyone who gave feedback on the original Stella St report, commentary about unpermitted work as insurance risk and the debt service scenario suggestion. Both are now built into every report.

I picked five actively listed small multifamily properties across DFW (two in Denton, three in Dallas/Garland) ranging from $995k to $7.75mm. Each report includes the same sections as the original (property overview, tax profile, permit history, FEMA flood zone, crime, demographics, walk score) plus the additions suggested in the forums: debt service scenarios at four rate assumptions (8.5%, 7.5%, 6.5%, 5.0%) across both 75% and 50% LTV, with CoC returns.

Here are the reports and the headline findings from each:

1) 1101 N Locust St, Denton — $1.95M, 6 units, 1984 build

https://drive.google.com/file/d/1hAEg6mn0zYRJxGLDPRQR5ToYhWg...

Broker advertises 5.9% cap and claims "fully renovated, all major systems newer." The LoopNet listing literally tags it as "High Vacancy Property", which directly contradicts the broker's "stable in-place income" framing. Only 5 permits in 20+ years, including a 2004 electrical failure where the meter bank burned up. Cash-flow negative at every leveraged scenario including proforma rents. Price needs to drop to ~$1.05-1.15mm to work.

2) 5015 Bryan St, Dallas — $5.36M, 36 units, 1956 build / 2018 reno

https://drive.google.com/file/d/1vsc9VbtsAok4eBFKAseL0XzGAzE...

Broker claims "down-to-the-studs renovation" in 2018 at $51k/unit. No permits found in the Dallas portal for this address. 14% occupancy: this is essentially a vacant building being sold as a stabilized asset at a 5% proforma cap rate. If the renovation is real and the lease-up executes, the deal works with debt financing at 6.5% and below. But the central question: why is a "fully renovated" 2018 property 86% vacant seven years later? That needs an answer before you dig in further, and certainly before you write a check.

3) 5313 Reiger Ave, Dallas — $7.75M, 26 units, 2025 new construction

https://drive.google.com/file/d/1q-fU-QMmp47M8mSXyDxB5oIZPQD...

New construction in Junius Heights, one of East Dallas's best neighborhoods. $298k/unit with luxury finishes. Problem: the deal is cash-flow negative at every 75% LTV scenario, including at 5.0% rates. Even at 50% LTV, you barely break even at 8.5% rates. The tax reassessment from $1.875mm (pre-construction assessment) to $5-6.5mm will add $57-97k in annual taxes. This is an all-cash buyer's deal at 4.6% CoC, or a negotiation play (it starts working at ~$6.5mm).

4) 2718 Cleveland St, Dallas — $995K, 8 units, 1961 build

https://drive.google.com/file/d/1mP6yMt5-sZxaKNoAyaH35oS28iq...

This one actually works. 100% occupied, 6.76% broker cap rate, $124k/unit in The Cedars (gentrifying neighborhood south of downtown). Tax assessment ($925k) is at 93% of asking, so there's minimal reassessment risk. Cash-flow positive at 75% LTV and 7.5%. Rare 3BR/4BR unit mix serves family and roommate demand that most urban multifamily misses. Trade-off: 75215 has an F grade for violent crime (6th percentile nationally). No permit history on a 64-year-old building = budget for deferred maintenance.

5) 5501-5505 Lake Hubbard Pky, Garland — $1.8M, 19 units, 1982 build

https://drive.google.com/file/d/1yaUSpZb8PGYr-nCrKfYZwABn17b...

FEMA Zone A (special flood hazard area). That single fact dominates everything about this deal. Mandatory flood insurance at $15-30k+/yr is a material NOI drag. But the tax picture is interesting: the combined assessment ($2.53mm) exceeds the asking price ($1.8mm), meaning zero reassessment risk and a strong basis for a property tax appeal that could save $17-24k/yr. Units are individually platted condos, creating an alternative exit strategy. Cash-flow negative at 75% LTV with current taxes; barely works at 50% LTV.

Biggest patterns across all five:

— Tax reassessment is the hidden killer on 3 of the 5 deals. If you're buying in Texas and the assessment is significantly below the purchase price, you MUST model the post-sale tax increase. It's not a risk, it's a certainty.

— Permit gaps are everywhere. Only one of the five properties had permits matching the broker's renovation claims. This doesn't necessarily mean the work wasn't done, but it's a conversation you need to have before you close.

— Most of these deals don't work with conventional leverage at current rates. Only 2718 Cleveland generates positive cash flow at 75% LTV and market rates. The rest require price reductions, owner financing, or a successful value-add execution to produce accretive returns.

I'm still offering to run one of these for free on a property you're actively evaluating. DM me an address and I'll put it together in exchange for honest feedback on what's useful and what's missing.

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Nicholas Cokas
Member since 2021 · 82 posts · 79 votes
7mo
What Actual Deal Analysis Looks Like: Five DFW Multifamily Deals, One Buy

Deal Analysis · DFW Small Multifamily

Grant, this is the kind of analysis that should be the standard on BP but almost never is. Most "deal analysis" posts are napkin math with made-up vacancy assumptions. You actually pulled permits, ran debt service scenarios at multiple rate/LTV combos, and let the numbers kill deals instead of forcing them to work. Respect.

A few things jumped out to me:

On Cleveland St — the reassessment math isn't as bad as it looks

Alex raised a good point about the reassessment delta, but it's worth noting the current assessment is $925K against a $995K ask. That's a 93% ratio. Dallas County typically reassesses to purchase price, so you're looking at maybe $70K in additional assessed value — roughly $1,500–1,900/yr in additional taxes depending on the exact millage rate, not the $8,700 Alex estimated (that assumed a $600K current assessment). That's the difference between "deal works day one" and "deal works day one comfortably." Still the only buy in the batch, and that 3BR/4BR unit mix in The Cedars is genuinely hard to find. Family-sized units in a gentrifying urban core is a demographic play most multifamily investors completely ignore.

On Bryan St — the vacancy tells you everything

You asked the right question: why is a "fully renovated" property 86% vacant seven years later? I'll add a layer to that. Zero permits on a claimed $51K/unit renovation isn't just a due diligence flag — it's an insurance underwriting problem. If you buy that building and file a claim on any of that "renovated" work, the carrier can deny it on the basis that unpermitted modifications void coverage on those components. I've seen this play out on denial appeals. The carrier pulls permit records, finds nothing matching the scope of work, and suddenly your $200K water damage claim becomes a $0 payout. That's not theoretical risk, that's how carriers actually operate in Texas.

The real pattern across all five — and it's not just DFW

Tax reassessment, permit gaps, and negative leverage at market rates aren't DFW problems. They're 2025–2026 small multifamily problems nationwide. The deals that actually pencil right now share three traits:

  1. Assessed value already near market so there's no tax surprise
  2. In-place income from long-term tenants — not proforma projections
  3. A unit mix or location characteristic that creates organic demand the owner doesn't have to manufacture

Cleveland St hits all three. The other four hit zero.

On the Garland flood zone play — the condo platting is the real story

Everyone's going to fixate on the FEMA Zone A designation, and they should. But individually platted condos in a flood zone create a specific exit strategy most people miss: sell units individually to owner-occupants who qualify for NFIP policies at residential rates (significantly cheaper than commercial flood policies on the whole complex). You'd essentially be buying at a flood-zone discount on the portfolio and selling at a reduced-but-less-discounted price per unit. Whether the spread is wide enough to justify the execution risk is the question, but it's not the "obviously skip" deal it appears to be on the surface.

Good work. This is what deal analysis is supposed to look like.

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  • Alex Rastorgouev
    Member since 2026 · 32 posts · 32 votes
    7mo

    This is a great breakdown Grant. The tax reassessment point is the one that doesn't get enough attention in DFW specifically. Texas has no income tax so property taxes run 2.2-2.7% of assessed value depending on the county, and Dallas County reassesses aggressively after a sale. On that Cleveland St deal at $995K, if the current assessed value is sitting at say $600K, you're looking at roughly $8,700/yr in additional taxes post-closing just from the reassessment delta. That's $725/mo straight off your NOI before you've changed a single thing about operations.

    I'm curious what cap rate you're backing into on Cleveland St after adjusting for reassessed taxes. If the broker's 6.76% is based on the seller's current tax bill, the real stabilized cap could drop to mid-5s once Dallas County catches up. Still the best of the five by a mile, but it's the difference between a deal that cash-flows day one and one that takes 12-18 months of rent bumps to get there.

    The permit gap finding is also really telling. In my experience that's one of the fastest ways to separate real renovations from cosmetic flips — if someone claims $51K/unit in renovation and the permit office has nothing on file, that's either unpermitted work (which creates insurance and resale risk) or the scope was way smaller than advertised. Either way it's a red flag worth digging into before you trust the rent projections.

    0Reply
  • Nicholas Cokas
    Member since 2021 · 82 posts · 79 votes
    7mo
    What Actual Deal Analysis Looks Like: Five DFW Multifamily Deals, One Buy

    Deal Analysis · DFW Small Multifamily

    Grant, this is the kind of analysis that should be the standard on BP but almost never is. Most "deal analysis" posts are napkin math with made-up vacancy assumptions. You actually pulled permits, ran debt service scenarios at multiple rate/LTV combos, and let the numbers kill deals instead of forcing them to work. Respect.

    A few things jumped out to me:

    On Cleveland St — the reassessment math isn't as bad as it looks

    Alex raised a good point about the reassessment delta, but it's worth noting the current assessment is $925K against a $995K ask. That's a 93% ratio. Dallas County typically reassesses to purchase price, so you're looking at maybe $70K in additional assessed value — roughly $1,500–1,900/yr in additional taxes depending on the exact millage rate, not the $8,700 Alex estimated (that assumed a $600K current assessment). That's the difference between "deal works day one" and "deal works day one comfortably." Still the only buy in the batch, and that 3BR/4BR unit mix in The Cedars is genuinely hard to find. Family-sized units in a gentrifying urban core is a demographic play most multifamily investors completely ignore.

    On Bryan St — the vacancy tells you everything

    You asked the right question: why is a "fully renovated" property 86% vacant seven years later? I'll add a layer to that. Zero permits on a claimed $51K/unit renovation isn't just a due diligence flag — it's an insurance underwriting problem. If you buy that building and file a claim on any of that "renovated" work, the carrier can deny it on the basis that unpermitted modifications void coverage on those components. I've seen this play out on denial appeals. The carrier pulls permit records, finds nothing matching the scope of work, and suddenly your $200K water damage claim becomes a $0 payout. That's not theoretical risk, that's how carriers actually operate in Texas.

    The real pattern across all five — and it's not just DFW

    Tax reassessment, permit gaps, and negative leverage at market rates aren't DFW problems. They're 2025–2026 small multifamily problems nationwide. The deals that actually pencil right now share three traits:

    1. Assessed value already near market so there's no tax surprise
    2. In-place income from long-term tenants — not proforma projections
    3. A unit mix or location characteristic that creates organic demand the owner doesn't have to manufacture

    Cleveland St hits all three. The other four hit zero.

    On the Garland flood zone play — the condo platting is the real story

    Everyone's going to fixate on the FEMA Zone A designation, and they should. But individually platted condos in a flood zone create a specific exit strategy most people miss: sell units individually to owner-occupants who qualify for NFIP policies at residential rates (significantly cheaper than commercial flood policies on the whole complex). You'd essentially be buying at a flood-zone discount on the portfolio and selling at a reduced-but-less-discounted price per unit. Whether the spread is wide enough to justify the execution risk is the question, but it's not the "obviously skip" deal it appears to be on the surface.

    Good work. This is what deal analysis is supposed to look like.

    2Reply
  • Jonathan Cannon
    Developer · West Dover VT · Member since 2026 · 15 posts · 3 votes
    7mo

    This is a solid breakdown — especially calling out the tax reassessment piece and the permit gaps. Most people miss both.

    The tax point in Texas is huge. I’ve seen deals that look fine at acquisition completely change once you reset the basis — it’s not really a variable, it’s almost a certainty like you said.

    What stands out across your examples is how thin everything gets once you layer in:

    • realistic taxes
    • true occupancy vs broker framing
    • actual debt costs

    At that point, most of these are either:

    • price adjustment plays
    • execution-heavy value-add deals
    • or equity-heavy (low leverage) holds

    The 36-unit at 14% occupancy is interesting — that’s essentially a repositioning deal being marketed like a stabilized asset. The question isn’t just whether it works, but why it hasn’t leased if the renovation is real.

    On the Cleveland deal — agree that it works on paper, but that combination of older vintage + no permits + crime profile probably means you’re underwriting some deferred maintenance and operational friction that doesn’t show up in the initial numbers.

    Overall takeaway feels right — most deals aren’t clearing with conventional leverage right now unless something is mispriced or there’s a clear angle.

    Curious — when you’re running these, are you stress testing construction / capex variance as well, or mostly focusing on income and debt scenarios?

    0Reply
  • Nicholas Cokas
    Member since 2021 · 82 posts · 79 votes
    7mo

    Jonathan — good question on the capex stress testing. Let me address that directly, and a couple of your other points.

    On capex/construction variance: Grant's reports focus on income and debt scenarios, which is the right starting point because that's where 90% of deals die before you ever touch a hammer. But you're right that capex variance matters — especially on the older vintage properties in this batch. The way I'd stress-test it on something like Cleveland St (1961, no permit history, 64 years old) isn't a percentage buffer on a line item. It's a systems-based reserve model:

    - Roof: age ÷ expected life × replacement cost. A 1961 building has almost certainly had at least one re-roof, but with no permits on file, you don't know when. Budget full replacement ($8-12/sq ft for an 8-unit) in your first 5-year hold proforma.

    - Plumbing: cast iron or galvanized on anything pre-1970 in Dallas. That's not a "maybe" — it's a timeline. Scope a camera inspection before close. $15-25K for a full re-pipe on a building that size.

    - Electrical: same era, same logic. If the panels haven't been upgraded, budget $2-4K/unit.

    - HVAC: individual units on an 8-plex means 8 systems. Average age unknown with no permits. Budget $5-7K/unit for replacements over a 5-year hold.

    Stack those up and you're looking at $150-250K in potential capital needs on a $995K acquisition. That changes your effective basis to $1.15-1.25M, which compresses your yield — but Cleveland St still pencils because the in-place income is real and the tax basis is already aligned. Most of the other four in Grant's batch don't survive that same exercise.

    On your Cleveland observation — "older vintage + no permits + crime profile probably means deferred maintenance and operational friction" is directionally correct but too vague to be actionable. The deferred maintenance isn't a mystery — it's predictable by system age on any pre-1970 build. The crime profile is a real factor, but it cuts both ways: it's why you're getting 8 units at $124K/door in a neighborhood where new construction is going for $298K/door three miles away. The Cedars isn't static — DART expansion, the convention center district push, and the Southside development corridor are all pulling that neighborhood. The crime grade is a snapshot, not a destiny. The question is whether the rent growth trajectory outpaces the operational drag, and in a gentrifying urban core with family-sized units, the demographics say yes.

    On the Bryan St framing — you called it "a repositioning deal being marketed like a stabilized asset," which is exactly what I said. But the deeper issue isn't the marketing framing, it's the insurance exposure. Zero permits on $1.8M in claimed renovation work means any future property damage claim on those "renovated" components can be denied by the carrier. That's not operational friction — that's a

    binary risk that can turn a $200K claim into a $0 payout. That distinction matters because it changes your underwriting from "budget for execution risk" to "budget for uninsurable risk," which is fundamentally different conversation.

    To your actual question — yes, capex variance should be stress-tested on any deal with deferred maintenance exposure. But in the current rate environment, most small multifamily deals are dying on the income-to-debt math before you even get to the capex conversation. Grant's approach of killing deals on debt service first and then digging into physical condition on the survivors is the right sequence.

    0Reply
  • Robert Latham Diamond
    Investor · Member since 2020 · 2 posts · 1 vote
    6mo

    Great analysis. The DFW numbers illustrate what's happening across most primary Sun Belt markets right now. Cap rates compressed to the point where debt service eats the entire cash flow at current rates.

    The math changes meaningfully in secondary markets. I've been spending more time looking at Heartland metros (Kansas City, OKC, Tulsa, NWA) where you can still buy workforce housing at a 150-250 bps spread over gateway cap rates. The same underwriting exercise you ran here produces fundamentally different results when your basis is $65-85K/unit instead of $150K+.

    The other factor that doesn't show up in a static analysis is tax reassessment risk, which you flagged. Texas reassessments are brutal. States like Arkansas, Oklahoma, and Missouri have more predictable tax environments that don't blow up your operating budget in year 2.

    For anyone comparing return profiles across market tiers, this has a good framework for thinking about what's realistic by strategy type: https://multifamilyinvestorguide.com/multifamily-investing-r...

    1Reply
  • Romina Gonzalez
    Member since 2026 · 21 posts · 6 votes
    6mo

    The permit gap pattern across all five is telling. How do you model the rehab side once you've flagged that?

    0Reply
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