Underwrite a deal someone sent you (red-flag hunt)

When a deal lands in your inbox, do not begin by deciding whether you like it.

Begin by looking for the stain on the hangar floor.

In plain English, this first underwriting pass is a fast search for the assumption that can make the deal wrong fastest. It does not replace full diligence. It decides whether the deal has earned more of your time.

The PDF wants you seated, comfortable, and staring at the destination. Stay outside for thirty minutes.

The 30-minute walkaround

Minute	Task	What you are looking for
0-5	Read the summary	Claimed returns, hold period, business plan
5-10	Check rent roll and T-12	Current income versus projected income
10-15	Check debt	Maturity, rate, amortization, reserves
15-20	Check capex	Cost, timing, contingency
20-25	Check exit	Exit cap, sale costs, debt payoff
25-30	Write the top three risks	The assumptions carrying the story

Set a timer. You are not trying to finish the underwriting. You are checking whether the current operations, loan, renovation plan, and exit can tell the same story without borrowing adjectives from the summary.

Thirty focused minutes can save two hours spent polishing someone else’s optimism.

Open the engine behind the NOI

Consider a hypothetical summary where year-three NOI grows from $700,000 to $950,000.

NOI increase:

$950,000 - $700,000 = $250,000

At a 6.0% cap rate, that increase implies:

$250,000 / 0.06 = $4,166,667

Now ask what creates the $250,000. Separate rent premiums, occupancy gains, other income, payroll changes, repairs, taxes, and insurance. If most of the improvement comes from higher rents and lower expenses with thin documentation, you found the engine carrying the valuation.

Do not argue with the $4,166,667. Inspect the $250,000 that creates it.

Claims need paperwork

If a claim depends on a document, ask for the document:

Claim	Document
Rents are below market	Rent roll and rent comps
Expenses will fall	T-12 detail and manager budget
Taxes are modeled correctly	Tax bill and reassessment estimate
Debt is safe	Lender term sheet
Renovations create premiums	Unit-turn history and contractor bids

The first pass should also identify what is absent:

• No current insurance quote.
• No contingency in the renovation budget.
• No extension conditions beside the loan maturity.
• No sale costs or debt payoff in exit proceeds.
• No bridge from scheduled rent to collected rent.

Missing evidence is not proof the claim is false. It is proof that confidence has arrived before its luggage.

Write the discrepancy card

Keep the output to one page:

Risk	Why it matters	Source requested	Status
Rent premium	Drives NOI growth	Signed renovated leases	Missing
Exit cap	Drives sale value	Sales comp packet	Partial
Insurance	Hits NOI	Current quote	Received

For each risk, write the base assumption, your checked range, the document requested, and the model line affected. A red flag without a next check is only a mood.

Decide whether it earns the hangar

Ask three questions:

• What assumption makes the upside disappear?
• Which missing document would change the answer most?
• What happens to debt coverage, reserves, and exit value if the top risk misses?

If the top risk remains unsupported, do not upgrade your confidence because the deck is attractive. Request the evidence, run the downside, and decide whether full underwriting is worth the time.

The first pass does not approve the deal. It tells you whether the wheels deserve to leave the ground.