How I Underwrite a Manchester Multifamily: A Live 6-Step Walkthrough

[Andrew Bosco]

How I Underwrite a Manchester Multifamily: A Live 6-Step Walkthrough

Most investors approach a new multifamily listing by opening the listing description, scanning the projected rents, and jumping straight into a calculator. By the time they've built a full model, they've committed significant time — sometimes to a deal that a 15-minute upfront process would have ruled out immediately.

I recently walked through a live underwrite on a Manchester, NH four-unit listed at $850K. The walkthrough revealed two distinct buyer scenarios, one AI output that would get you laughed out of a negotiation, and a specific sequence that I've developed for evaluating any multifamily deal before touching spreadsheet software.

Here's the sequence.

Step 1: Pull Listing Photos Before You Run Any Number

The first thing I'm looking for is utilities separation. On the exterior photos, I'm counting meters. One meter per unit means the tenants are responsible for their own utilities — a meaningful positive for expense management. A shared or single meter means you need to understand exactly who pays what before your expense stack means anything.

On the Manchester 4-unit, the listing confirmed utilities were separated. That's a significant positive. If they weren't, I'd be adding $400–$600/month in utility expense to the model before I knew anything else about the deal.

Step 2: Read the Disclosure Forms Before the Listing Description Most investors read the marketing. I go straight to the disclosures.

What I'm looking for: how long has the current owner held the property (short-term holders often don't know the building well), any flagged pest or environmental issues, heating system age, electrical service per unit.

On this deal: the seller disclosed a pest infestation. The heating system was forced hot air oil at 21 years old — a capital expense I'd need to budget for immediately. And the listing history told a story: the property was listed at $839K, sold at $760K, and came back to market at $850K. That $90K delta after a short hold had an explanation. The pest disclosure was probably it.

I want 100 amps per unit, not 100 amps shared across four units. Shared service is a significant deferred maintenance item.

Step 3: Check the Micro-Location Before You Check the Numbers

Manchester has distinct micro-markets. The same building design on different streets can command $100–$200/month different in rent and attract different tenant profiles. Running spot crime on the address and checking walkability (grocery, transit, employment corridors) takes 10 minutes and tells you whether your rent assumptions will hold up.

This isn't profiling a neighborhood. It's underwriting.

Step 4: Pull HUD Fair Market Rent — Use 90% of That Number

The Department of Housing and Urban Development publishes Fair Market Rent annually for every metro area by bedroom count. For Manchester, a 3-bedroom unit currently sits at $2,442/month (HUD, 2025).

I use 90% of that figure as my conservative income assumption: $2,250 for the 3-bed in this case. The 10% buffer accounts for vacancy during lease-up, units that aren't the strongest comp in the set, and a margin that keeps the model honest.

[Image recommendation: A screenshot of the HUD FMR lookup page would strengthen this section.]

If the deal doesn't pencil at 90% of HUD FMR, it doesn't pencil. That single rule has saved me from more bad models than any other part of my underwriting process.

Step 5: Build the Full Expense Stack First

Seller pro formas almost always exclude property management fees, CapEx reserves, vacancy, and often repairs and maintenance. The AI analyzer I ran on this deal caught this immediately — the seller's NOI was inflated because several expense categories weren't included.

On the Manchester 4-unit, my full expense stack included:

Property taxes: $916/month (~$11K/year assessed)

Insurance: per disclosure

Repairs and maintenance: 5% of gross income

CapEx: 5–7% (given heating system age and pest history)

Vacancy: 5%

Property management: 8% (investor scenario)

Utilities: minimal — tenants pay their own

Build the expense stack before you look at gross income. It grounds the model in reality.

Step 6: Run Two Scenarios — Investor and House Hacker

Every deal with a vacant unit gets run two ways in my analysis.

Investor scenario (25% down): At $850K with one vacant unit, the property loses $584/month. Expected — you're carrying a vacancy. Fully rented at $8,225/month gross: the property generates +$1,200/month. But at $850K, it still doesn't hit my benchmarks: I need 8–10% cap rate and 10–12% cash-on-cash within 12 months. At $750K? The deal lands at roughly $1,700/month cash flow, ~8% cap rate, and close to 10% COC. That's the number where an investor conversation gets serious.

House hacker scenario (5% down): Living in the vacant 3-bed unit, the property loses roughly $1,000/month in year one. But a 3-bed in Manchester rents for $1,800–$2,200 on the open market. If a buyer's alternative is paying $2,000 in rent, paying $1,000 to own a 4-unit is a very different proposition. Year two: move out, get the unit rented, stop absorbing that unit's carrying cost. The property flips to roughly +$1,200/month positive.

That's a $2,200/month swing in 12 months through delayed gratification.

The Bottom Line

The same six-step sequence will tell you most of what you need to know before you spend three hours building a full model. On the Manchester 4-unit, it told me: this deal is best suited for a house hacker at ask price, not a pure investor. The investor scenario works at $750K, not $850K.

Identifying the right buyer type before evaluating the deal changes every assumption that follows. It's a discipline that takes time to build — but it's the difference between deals that pencil and deals that look like they pencil until you own them.