There is an old adage in real estate that money is made on the buy. Buying a property at the right price is undeniably important. It creates a margin of safety and sets the ceiling on what the investment can achieve. But even the best acquisition becomes a mediocre investment without strong execution of the business plan. Returns are made on the buy, and they are realized through execution.
The Importance of Basis
Your cost basis, meaning the total price paid plus the capital invested into the property, determines how much room you have for error. A favorable basis protects investors when markets soften, provides flexibility on the timing of a sale or refinance, and reduces the pressure to hit aggressive projections just to break even.
A strong basis comes from sourcing. Off-market relationships with brokers and owners, the ability to close with certainty, and a willingness to take on properties that require more work than most buyers want can all lead to better pricing than a widely marketed deal.
Underwriting Discipline
Professional underwriting goes beyond optimistic assumptions. Every deal should be stress-tested against scenarios in which things go wrong:
- Rent growth: What happens if rents grow more slowly than projected, or not at all for a year or two?
- Renovation costs: Is there a contingency reserve for cost overruns and delays?
- Interest rates: Can the property carry its debt if rates rise, and what happens if refinancing is not available on schedule?
- Exit value: Does the deal still work if the property sells at a lower valuation multiple than it was purchased at?
- Expenses: Are insurance, property taxes, and payroll projected realistically, including a likely tax reassessment after the sale?
If a deal only works under the best-case scenario, it is not a good deal. Disciplined operators are defined as much by the deals they pass on as by the deals they close.
Execution of the Business Plan
The gap between projected and actual returns is determined by execution. The business plan is only a set of assumptions until someone carries it out: renovating units on time and on budget, leasing them at the projected premiums, controlling expenses, and keeping residents satisfied along the way.
Execution is also where small issues compound. A renovation schedule that slips by a few months delays rent increases, extends vacancy, and pushes back the timeline for a refinance or sale. Conversely, a team that finishes units quickly and leases them efficiently can outperform projections even when the market is flat.
The First 100 Days
Much of a deal’s trajectory is set in the months immediately after closing. Transitioning property management, auditing leases and collections, bidding out contracts, launching the renovation program, and communicating changes to residents all happen at once. A sponsor with a clear takeover plan and experienced partners in place protects investors from the costly disruptions that often follow an acquisition.
The Sponsor’s Role
An experienced sponsor brings relationships, market knowledge, and operational expertise that are essential to successful execution. That includes the ability to navigate construction challenges, adjust when market conditions shift, hold property managers accountable, and maintain clear, honest communication with investors throughout the hold period, especially when things do not go according to plan.
For passive investors, evaluating the sponsor is therefore as important as evaluating the property. Look at their track record through full cycles, how their past projections compared to actual results, and how they communicate.
Measuring Success
Ultimately, success in multifamily investing is measured by the returns actually delivered to investors, not the returns projected at acquisition. Disciplined buying, conservative underwriting, and relentless execution work together. Any one of them alone is not enough.
See how Greyvale approaches acquisitions and execution. Explore our case studies or learn about upcoming opportunities.
