Multifamily Underwriting: Bridging the Gap Between Stabilized and In-Place Performance

4 Star Mid-Rise Apartments, Suburban

Introduction

Lenders financing multifamily properties today face a complex environment of record supply, shifting rents, and evolving tenant behaviors. Many assets are operating below their theoretical “stabilized” potential due to factors like loss-to-lease (in-place rents trailing market levels) and rent concessions offered to attract or retain tenants. These gaps between stabilized expectations and in-place reality can materially impact Net Operating Income (NOI), debt coverage, and loan proceeds. This article provides a data-driven analysis – drawn from the MMCG database of national multifamily metrics – on loss-to-lease, concessions, and renewal economics. We focus on the deltas between stabilized vs. in-place performance and offer insights to help lenders make risk-adjusted decisions in multifamily underwriting. Key themes include definitions of critical metrics, rent and occupancy dynamics, renewal rent “drag,” class and regional variations, implications for NOI forecasting and DSCR, the construction pipeline’s impact on lease-up, and prudent approaches to concession burn-off. The goal is to enhance lender awareness of where portfolios may underperform relative to pro forma and how to account for these factors to ensure sustainable loan performance.

Defining Loss-to-Lease and Concessions

Loss-to-lease in multifamily refers to the rent income “lost” due to in-place leases being below current market rent. In essence, it is the gap between what tenants are actually paying and what they would pay if all units were leased at today’s market rates. A significant loss-to-lease often accumulates during periods of rapid market rent growth or if a property locked in longer leases at lower rates. For lenders, this metric signals embedded NOI upside and potential risk: upside because below-market leases could be marked to market over time, but risk if aggressive underwriting assumes that gap will quickly vanish.

Rent concessions, on the other hand, are discounts or incentives offered to tenants – typically free rent periods or move-in credits – that reduce the effective rent collected relative to the face (asking) rent. Concessions are common in competitive or oversupplied markets as a tool to boost occupancy. For example, as of mid-2024 approximately 21% of U.S. multifamily units were offering concessions, with a typical concession averaging about 5% of asking rent (i.e. equivalent to a few weeks free on a one-year lease). While most concessions are modest (generally less than one month’s free rent, ~8% of annual rent), in certain oversupplied markets landlords resorted to far heavier discounts – promotions of 6 to 8 weeks free rent were not uncommon in late 2024. Figure 1 below illustrates recent asking vs. effective rent levels by asset class, highlighting the impact of concessions on realized rents.

Property Class	Vacancy Rate	Asking Rent (Q3 2025)	Effective Rent (Q3 2025)	Concession Gap (% off)
Class A (4 & 5 Star)	10.9%	$2,174	$2,141	~1.5% lower
Class B (3 Star)	7.8%	$1,614	$1,598	~1.0% lower
Class C (1 & 2 Star)	5.9%	$1,358	$1,349	~0.7% lower
National Average	8.2%	$1,761	$1,740	~1.2% lower

Figure 1: Asking vs. Effective Rents and Vacancy by Class (Source: MMCG database). Higher-quality assets show larger rent gaps due to concessions.

As shown above, effective rents trail asking rents in all segments, indicating prevalent concessions nationwide. The gap is widest in top-tier Class A properties (~1.5% off asking on average) and more modest in Class B/C (~0.7–1.0%). This aligns with intuition: newer luxury buildings often use concessions to lease-up, whereas workforce housing sees less discounting. From a lender’s perspective, both loss-to-lease and concessions represent a form of income leakage – the property’s current cash flow is lower than its potential. Recognizing these gaps is critical in underwriting. Loans based on pro forma “market” income must account for time and execution needed to close the gap, while loans based on in-place income should consider whether below-market rents imply future growth (or simply reflect a weak submarket). In short, understanding why a gap exists (e.g. temporary lease-up concession versus chronic below-market rents) is key to assessing risk.

Stabilized vs. In-Place Rent and Occupancy Dynamics

“Stabilized” performance generally refers to a property operating at a normalized occupancy and market rent level after any initial lease-up period or renovations. In many markets, stabilized occupancy is around 95%, and rents are at prevailing market rates with minimal concessions. “In-place” performance, however, reflects the property’s current reality – which may include occupancy shortfalls and in-place rents below market due to loss-to-lease or ongoing concessions. The delta between stabilized and in-place metrics has grown recently, as the sector absorbed an unprecedented supply wave.

Occupancy: A healthy stabilized occupancy for multifamily has historically been in the mid-90% range, but in the past year national occupancy has lagged that benchmark. Oversupply pushed U.S. occupancy for stabilized properties below 94% through most of 2024. In fact, overall vacancy rose to 8.3% by late 2024 (a decade high), up from a low of 4.9% in 2021. Even as demand remained robust, the sheer volume of new deliveries drove a wedge between overall vacancy and the vacancy level in established, stabilized communities. Notably, stabilized vacancy (excluding lease-up properties) has stayed elevated in the mid-6% range in 2025, even as overall vacancy started to inch down. In other words, older properties are not back to full occupancy because they are competing with many new units. This divergence – overall vacancy improving while stabilized assets still have unusually high vacancy – underscores that many markets have yet to fully digest recent supply. For lenders, this means pro forma assumptions of a quick return to 95% occupancy may be too optimistic in certain metros. Properties might operate at 90–93% occupancy for an extended period, pressuring revenue and slowing the lease-up of newer projects.

Rents: A similar story is playing out with rents. In-place rents are often trailing market (stabilized) rents, especially in fast-growth markets or during periods after a rent spike. For example, the U.S. saw record rent growth in 2021–2022 (market rents jumped about 9–10% year-over-year at the peak). Such surges inevitably create loss-to-lease for landlords who cannot reprice existing leases quickly enough. A tenant who signed a 12-month lease last year at $1,500 while market rent soared to $1,600 represents $100 of lost rent potential until that lease expires or is renegotiated. Across a whole portfolio, these below-market leases can materially drag down NOI relative to current market potential. Figure 1 above already revealed that effective rents (reflecting in-place leases) are ~1%–1.5% below asking rents on average due to concessions. In high-growth markets, the gap between in-place average rents and true market rates can be even wider (5–10% in some cases) when multiple years of rent increases outpace the bumps that renewing tenants received.

It is important to distinguish why in-place rents are lower. If it’s mainly due to introductory concessions in lease-up, then those leases might bump up to market on renewal (assuming the market holds). If instead it’s because management has kept renewals low to maintain occupancy, that suggests an ongoing trade-off between rate and occupancy. For underwriting, lenders should examine rent rolls to quantify loss-to-lease: compare the average in-place rent to current asking rents or recent leases. This measures the embedded rent growth potential if the market is favorable and units can be marked to market. However, lenders should exercise caution before crediting all of that upside in underwriting – it may take time (and possibly some tenant turnover) to realize, as discussed next.

Renewal Spreads and Below-Market Lease Drag

A critical factor in how quickly loss-to-lease can be recaptured is the renewal spread – the rent change achieved when tenants renew leases, relative to their prior rent (and relative to new lease market rates). Property owners often face a balancing act: raise renewal rents too aggressively and risk a move-out, or keep increases modest and let below-market leases persist. In the recent softening market, many landlords opted to prioritize resident retention. This strategy kept physical occupancy steadier but created a drag on rent growth, as a higher share of tenants stayed at rates set in prior years. Industry data shows that in 2023–2024, renewal rent growth often exceeded new-lease rent growth – the opposite of the pattern seen during the 2021 boom. For instance, one Sun Belt REIT reported that in early 2024 its new leases came in ~6% lower on rent than a year prior, while renewal leases still rose about 5% for existing residents. This scenario arose because new move-ins had to be priced competitively (due to abundant new supply offering deals), whereas renewals could be raised modestly since many tenants preferred to stay rather than face the expensive broader housing market. The net effect was a slightly negative blended rent growth overall in that portfolio – essentially flat rents – despite a sizable loss-to-lease on paper. The “captive” renewals saw increases, but not enough to offset declines on new leases needed to fill vacant units.

This dynamic illustrates “portfolio drag” from below-market leases. Even when market rents are rising, a property with a high share of incumbents at low rents will realize that growth slowly as those leases turn over. If owners hold renewals below market to avoid turnover, they reduce near-term cash flow but perhaps mitigate vacancy loss. For lenders, the implication is to scrutinize lease expiry schedules and renewal policies. A rent roll with many long-term tenants at rates, say, 10% under current market represents potential upside but also the possibility that the owner may only capture a portion of that upside annually (e.g. implementing 5% raises over two years rather than 10% at once). In underwriting, it may be wise to model gradual absorption of loss-to-lease – for example, assume only half of the gap is closed on renewal, or that it takes 2–3 turnover cycles to get all units to market rent. This more conservative view acknowledges frictions in raising rents: tenant goodwill, the cost of turnover, and the competitive landscape all limit how fast below-market leases can be corrected.

Notably, high concession environments exacerbate this drag. A tenant who benefited from a two-month free concession in their first year effectively received a ~16% discount. When that lease comes up for renewal, an owner might try to remove the concession and charge full rent – amounting to a large one-time increase in effective rent. In reality, if similar new units are still offering freebies, that tenant will have little incentive to accept a big hike. Thus, initial concessions can carry over into renewed concessions or lower renewal rates if the competitive pressure hasn’t eased. This again counsels lenders to be cautious in projecting post-concession income jumps; if the market remains soft, concession burn-off could be delayed (as we explore further below).

Regional and Class-Level Differences

Not all markets and property classes are experiencing these issues equally. The loss-to-lease, concessions, and occupancy dynamics vary significantly by region and asset class, which is critical for lenders to incorporate into their underwriting.

Regional Variations: Markets that saw the heaviest development in recent years – often in the Sun Belt and Southwest – are grappling with higher vacancies and greater rent softness, whereas many coastal and Midwest markets are comparatively tight. According to MMCG’s data, the South and Southwest regions have borne the brunt of oversupply; vacancies in markets like Austin, Phoenix, Nashville, and Dallas jumped due to a surge of new deliveries, and rent growth turned negative in many of these locales. In contrast, many Northeast and Midwest metros, with fewer new builds, maintained more balanced fundamentals and even modest rent gains. As of late 2025, among the 50 largest markets, Austin, Memphis, and San Antonio had some of the highest vacancy rates nationally – a clear sign of oversupply – whereas markets with limited new construction were closer to historical occupancy norms. For lenders, this means the stabilized vs. in-place gap is likely larger in high-supply markets. An asset in Austin might be 88% occupied with multiple months’ concession on new leases (i.e. far from stabilized performance), whereas a similar vintage asset in, say, Philadelphia might be 96% occupied with minimal concessions. Underwriting standards should thus be calibrated to local conditions: in oversupplied regions, assume longer lease-up periods and persistent concessions; in constrained markets, underwrite closer to stabilized figures but watch for any economic or policy changes that could alter demand.

Class A vs. Class B/C: The property’s class (often correlated with its age and quality) also drives performance deltas. The recent construction boom was heavily concentrated in top-tier Class A apartments – by early 2023, roughly 75% of units under construction were in 4- & 5-Star (luxury) properties. This flood of high-end supply has elevated vacancy in Class A: currently about 10.9% vacancy for 4 & 5 Star units, versus 5–8% in mid- and lower-tier segments. Class A communities are often in lease-up or competing with new deliveries, explaining both the higher vacancy and the more widespread use of concessions (recall the ~1.5% rent gap in Class A vs <1% in Class C from Figure 1). Rent growth has accordingly been weakest at the top end – effectively flat or slightly negative year-over-year for Class A nationally. In contrast, Class B and C properties (older, more affordable units) have maintained higher occupancy and even outpaced the overall market in rent growth (e.g. Class C rents up ~1.3% year-over-year, versus essentially 0% for Class A). These Class B/C assets benefit from strong renter demand and limited new competition; however, they are not entirely immune to pressure, as some renters “trade down” when luxury rents spike, and economic challenges can hit lower-income tenants.

For lenders, class considerations are key to risk assessment. A newly built luxury project in a saturated submarket might be leasing at well below pro forma rents, carrying significant loss-to-lease and concession exposure until it stabilizes – a clearly higher risk profile. Such properties warrant lower loan-to-value (LTV) ratios, interest reserves, or stronger sponsorship requirements to mitigate lease-up risk. By contrast, a stabilized Class B apartment with 97% occupancy and steady rent growth may present a more durable income stream, though one should still consider if its tenants are benefitting from below-market long-term leases (a different kind of loss-to-lease scenario). Additionally, portfolio composition matters – a portfolio heavily weighted to Class A urban properties in the Sun Belt has very different aggregate risk (and upside) than one focused on suburban garden apartments. Lenders should probe these mix effects: is the overall NOI projection counting on aggressive rent lifts in Class A units? Is there diversification to offset regional or class-specific softening? Tailoring covenants and structures (e.g. shorter amortization, faster cash sweeps if NOI underperforms) can help account for these class and regional differences.

Impact on NOI Forecasts, Refinance Proceeds and DSCR

The discussion so far makes clear that in-place underperformance relative to stabilized pro formas can undermine financial metrics critical to lenders – especially Net Operating Income (NOI) growth, Debt Service Coverage Ratios (DSCR), and future refinancing or exit valuations.

When a loan is underwritten, lenders often consider a stabilized NOI (forward-looking) to size the loan, but debt service in reality will be paid from day-one in-place cash flow. If the gap between in-place and stabilized is large, there is a risk the property won’t generate enough cash flow initially to cover debt comfortably, especially if interest rates are high. For example, a deal might be underwritten to a 1.25× DSCR at stabilized NOI, but if initial occupancy is 85% with heavy concessions, the actual year-one DSCR could be under 1.0× – meaning cash flow barely covers or even falls short of debt service. Lenders should build in sufficient interest reserves or conservative funding draws to bridge this shortfall period. Moreover, sensitivity analyses are prudent: what if occupancy takes 6 months longer to reach stabilization? What if rents achieved are 5% below pro forma because concessions persist? These scenarios can significantly erode DSCR and must be stress-tested.

Refinance risk is another major concern. Many multifamily loans are short-term or bridge financings expecting to take out the loan with a refinance once the property is stabilized at higher NOI. But if market conditions shift or the property underperforms, the anticipated refinance proceeds may not materialize. We have seen cap rates rise and values correct from their 2021 highs – multifamily asset values in early 2024 were ~21% below their peak 2022 levels on average. This decline is partly due to higher cap rates (many markets moved from sub-4% caps to ~5% or higher) and partly due to NOI shortfalls from the issues discussed (occupancy and rent underperformance). A property that was expected to stabilize at $1 million NOI and a 5% cap (implying $20 million value) might instead be at $900k NOI and facing a 5.5% market cap rate – implying a value closer to $16 million. The permanent loan or sale proceeds in that scenario could be millions lower than projected, potentially leaving a financing gap. Lenders can guard against this by limiting credit to in-place income or applying higher cap rate assumptions in their underwriting valuations. Another tactic is requiring sponsors to inject capital if NOI or value thresholds aren’t met by the refinance date (structured as earn-outs or step-downs in loan amount).

DSCR sustainability over the loan term is also at stake. If a borrower and lender both assume NOI will grow 10% in the next year (by burning off concessions and marking leases to market), they might accept a thin DSCR initially, expecting it to improve. But if that growth doesn’t come, the loan could be stuck at a low DSCR for longer, raising default or covenant breach risk. Portfolio-wide, many lenders are now closely watching loans made in 2021–2022 that banked on future rent growth. With the market slowdown, some of these properties have flat or declining NOI, putting pressure on DSCR, especially as floating interest rates increased. To maintain DSCR, some owners are cutting expenses or capital expenditures, but those are short-term fixes that can have other negative consequences (deferred maintenance, unhappy tenants). Therefore, prudent underwriting today assumes modest NOI growth at best in the near term – certainly not the double-digit increases seen post-pandemic. Incorporating the possibility of a slower ramp-up (or even a dip in NOI if a recession hits or oversupply worsens) is essential for structuring loans that can withstand stress.

In summary, the gap between stabilized and in-place performance can directly translate to shortfalls in cash flow and asset value versus expectations. Lenders should adjust their valuation and DSCR calculations to primarily reflect current in-place performance, adding reliance on future improvements only with caution and appropriate risk mitigants. This may entail slightly smaller loan amounts or additional credit support up front – a worthwhile trade-off to avoid future credit issues.

Construction Pipeline and Timing of Stabilization

An overarching factor driving many of these issues is the multifamily construction pipeline, which dictates how long competitive lease-up conditions will persist. The U.S. apartment market just experienced an unprecedented surge of new supply: 2024 saw the highest level of deliveries in roughly 40 years, culminating in over 700,000 new units delivered in that year alone. This wave inundated many markets, and it will take time for absorption (new leasing demand) to catch up. The good news is that the pipeline is now thinning markedly – annual new supply is forecast to drop to ~490,000 units in 2025 (about a one-third decline year-over-year) and then plummet to around 260,000 units in 2026, the lowest national addition in over a decade. Construction starts have already fallen to their lowest levels in more than 10 years as developers pull back, constrained by higher interest rates, construction costs, and stricter financing.

For lenders, these pipeline dynamics offer a timeline for when markets might rebalance – but also highlight the near-term risk. In oversupplied metros (e.g. many Sun Belt cities), 2024 was the peak pain: vacancy spiked and rent growth stalled under the flood of new units. As we move through 2025 and into 2026, the drastic cutback in construction should allow demand to gradually absorb the excess. Indeed, MMCG forecasts suggest that by mid-2026, many overbuilt markets will begin to see vacancy rates stabilize or decline and rent growth turn positive again. Some major markets have already “crested” in supply – e.g. parts of California and the Northeast saw new supply taper off, and their fundamentals are improving. Even in high-supply areas, Class A assets are expected to reach stabilization by late 2025 as the pipeline eases.

However, between now and that inflection point, properties in lease-up or early operation face an extended runway to stabilization. Lease-up periods have stretched longer than in prior cycles – it is not uncommon for a large new apartment community to need 18+ months to reach stabilized occupancy in today’s climate, versus the 9–12 months that might be assumed in rosier times. As an example, an apartment project in the Southeast delivered in late 2023 was only ~49% occupied by early 2024 and not expected to fully stabilize until late 2025 (roughly two years from opening). Many developers are carrying such properties longer, burning more free rent and marketing dollars to fill units. From a lending standpoint, this calls for patience and adequate stabilization timelines in loan covenants. If a borrower pro forma shows hitting 95% occupancy in 12 months, a prudent lender might underwrite 18–24 months and ensure the loan term (or extension options) accommodate that. Interest reserves or delayed amortization can buffer the lease-up period. Additionally, sponsors should demonstrate they have the financial capacity to support the asset if stabilization takes longer than planned (since operating deficits or additional concession costs may accrue).

Another consideration is the clustering of lease expirations that will occur following a lease-up wave. Properties that delivered in 2024 often offered one-year leases with concessions; many of those leases will expire in 2025. If a market still has multiple properties coming online around the same time, there’s a risk of renewal cliffs, where many units come up for renewal in a similar window amid ongoing competition. This could force owners to extend concessions into second-generation leases or drop rents to keep occupancy. Lenders might factor this into cash flow projections, perhaps by not assuming full market rent on all those units in year 2, but rather a continued occupancy or concession drag until the market normalizes.

In sum, the construction pipeline is a double-edged sword: it caused the current softness, but its impending decline is the path to recovery. Lenders should stay abreast of local supply forecasts – both the magnitude of what’s delivering and the timing. A market expecting a 40% drop in deliveries (like Atlanta, which is slated to go from 26,000 units delivered in 2024 to ~16,000 in 2025) will likely stabilize faster than one where new projects are still finishing. Aligning underwriting and loan maturities with these supply cycles can mean the difference between refinancing in a tough market versus a healthy one. When in doubt, build in extra cushion for stabilization timing – it’s far better for a loan to outperform because lease-up finished early than to struggle because it assumed an overly optimistic absorption pace.

Concession Burn-Off and Underwriting Conservatism

A particular flashpoint for underwriting is how to handle concession burn-off – the expected expiration of free rent and other discounts after initial lease terms. In theory, once a property is stabilized and the market improves, those one-time concessions should disappear, yielding an automatic bump in effective rents. Indeed, industry outlooks are optimistic that 2025 will be a year of concession burn-off in many markets. As supply growth subsides and demand steadily increases, landlords will likely scale back incentives. Many leases signed in the soft 2023–2024 period with 4–8 weeks free will not be renewed with the same concessions if the competitive landscape eases. The discontinuation of such giveaways can result in effective rent growth that outpaces nominal market rent growth – essentially a catch-up as net rents realign with asking rents.

However, from a lender’s perspective, it pays to approach this anticipated improvement with conservatism. Not all concessions will burn off overnight. The process will be uneven and market-specific. Some lagging markets with persistent high vacancy may continue to see lingering incentives into 2025 and 2026. Underwriting should therefore phase in the burn-off rather than assume a full jump to market rents immediately. For example, if a project gave one month free on all new leases, an aggressive pro forma might assume that year 2 renewals get zero months free (an 8% effective rent increase). A conservative approach might assume year 2 renewals still require, say, half a month concession on average (so perhaps only a 4% net effective increase), with full normalization by year 3. This kind of staggered burn-off assumption provides a buffer in case the competitive environment remains challenging. If the market improves faster and concessions truly evaporate, the asset will outperform the underwritten case – a preferable scenario to the reverse.

Underwriting conservatism in the current climate can be summarized by a few key practices for lenders:

• Use In-Place Effective Rents and Occupancies as the Baseline: Rather than starting from a pro forma “stabilized rent” number, begin with actual effective rents (post-concession) and current occupancy. Only build in increases that are supported by clear market evidence (e.g. leasing velocity, market rent trends). This avoids overstating revenue from the outset.

• Cap the Growth Assumptions: If loss-to-lease is 10%, do not assume 100% recapture in one year. Consider capping rent growth assumptions to a reasonable percentage (e.g. 3–5% annually) until the loss-to-lease closes, even if that means the property still has some below-market leases in the near term. This aligns with broader market rent forecasts, which for 2025–2026 are in the low-to-mid single digits nationally, and acknowledges that pent-up rent potential is not guaranteed to materialize immediately.

• Extend Lease-Up Durations in Models: As discussed, add extra months to the lease-up/stabilization period in underwriting models compared to developer pro formas. If the developer says 12 months, test 18 or 24. Ensure the loan structure (interest-only period, reserves) can cover that extended timeframe without compromising DSCR covenants.

• Account for Concession Persistence: In cash flow projections, explicitly model the step-down of concessions. For instance, if year 1 effective gross income is reduced by $x due to concessions, you might model year 2 with $x/2 concession cost instead of $0, tapering off to $0 in year 3. This creates a more gradual NOI ramp that can be revisited as market conditions evolve.

• Scrutinize Expense and Capex Needs: A less obvious but related point – if occupancy is being maintained via concessions, the property might also be incurring higher marketing costs or experiencing more wear-and-tear from higher turnover. Underwriting should not simultaneously assume unrealistically low operating costs. Building in adequate operating expense growth (or at least not cutting expenses in the pro forma) is part of conservative practice, ensuring DSCR isn’t propped up by unsustainable cost assumptions.

Finally, lenders should keep an open dialogue with sponsors about their lease management strategy. Are they inclined to push rents and accept vacancy, or to use concessions to fill units? How have they handled renewals historically? The answers can inform whether the business plan to get from in-place to stabilized performance is credible. By incorporating the above conservative measures, lenders can structure loans that remain secure even if the market recovery is slower or weaker than hoped. Risk-adjusted underwriting in today’s multifamily sector means expecting the best (many signs point to improvement ahead) but preparing for the worst (ensuring the loan can weather a longer slump).

Conclusion

The current multifamily landscape presents a cautionary tale in the importance of distinguishing stabilized potential from in-place reality. For lenders, understanding concepts like loss-to-lease, concessions, and renewal spreads is not just academic – it directly impacts credit risk and loan performance. In this article, we highlighted how an abundance of new supply and a cooldown in rent growth have led to measurable gaps between what properties could earn versus what they are earning. We discussed how these gaps manifest in occupancy and rent metrics, vary across regions and asset classes, and can erode NOI and DSCR if not underwritten prudently. The silver lining is that the supply boom is receding, and market forces are gradually restoring equilibrium – meaning many of today’s underperforming assets have a path to improved income in the next 1–3 years. The key for lenders is to bridge that interim period safely. By using granular data (like the MMCG database stats cited throughout) and adopting conservative assumptions around rent increases and lease-up timing, lenders can make informed, risk-adjusted decisions. In practice, this may entail slightly lower leverage or more structural enhancements, but it ultimately protects both lender and borrower from unforeseen shortfalls. The multifamily sector’s fundamentals remain sound in the long run – housing demand is firm and financing conditions will eventually normalize – but nuanced underwriting is essential in the short run. Armed with a clear view of the delta between stabilized and in-place performance, lenders can continue to fund the multifamily market’s needs while safeguarding their loans through this cycle. In doing so, they position themselves and their borrowers to capitalize on the recovery once those loss-to-lease gaps finally close and concessions truly burn off, yielding a stabilized income stream that matches the vision initially underwritten.

October 21, 2025, by a collective authors of MMCG Invest, LLC, multi family feasibility study consultants.

Sources: All data and insights are derived from the MMCG database of U.S. multifamily market metrics and research, which aggregates industry-leading market reports and analysis. This includes national rent and vacancy statistics, construction pipeline figures, and class/region performance benchmarks curated from Q3 2025 market reports and related research. These sources provide the empirical foundation for the underwriting considerations discussed.