Every property worth a serious look gets underwritten before an offer goes in. Commercial real estate underwriting is the process of testing whether a deal’s numbers actually hold up — not just at face value, but under realistic financing, expense growth, and exit assumptions. For investors who don’t want to build a model from scratch, or who want a second set of eyes on one they’ve already built, this is where our buyer-side practice adds the most direct value.
What Goes Into an Underwriting Package
For every property a buyer is seriously considering, we build out:
- Trailing 12-month operating statement reconstruction, with a line-item review of income and expenses as reported versus what’s realistic going forward
- Forward-year NOI projection, incorporating realistic expense growth and lease renewal probabilities rather than the seller’s best-case assumptions
- Cap rate sensitivity table at entry and exit, modeling 25, 50, and 100 basis-point shifts so a buyer can see how sensitive returns are to market movement
- Financing scenarios at current market rates, with realistic loan-to-value and debt service coverage ratio constraints
- Cash-on-cash return and unlevered IRR, under both base-case and downside scenarios
- Tenant credit summary — public credit ratings for net-lease tenants, or financial statement review where available for private operators
The goal isn’t a 40-page model for its own sake. It’s surfacing the two or three numbers that actually determine whether the deal works for a given buyer’s return requirements.
Cap Rates and Underwriting
Listed cap rates are frequently 25–75 basis points more aggressive than what properties actually close at — sellers and their brokers have an incentive to market at the tightest defensible number. Part of underwriting support is applying real, current closing cap rate data for the specific tenant, lease structure, and location in question, not the number on the offering memorandum. For current cap rate ranges relevant to your target property type and market, contact us directly — this shifts too often, and by too much depending on the deal specifics, to publish a static number here.
Underwriting for Financed Acquisitions
For buyers using debt, underwriting commercial real estate loans means working through the deal from the lender’s perspective as well as the buyer’s: DSCR minimums, amortization assumptions, rate environment, and how a given lender is likely to view the tenant credit and lease term. We coordinate directly with your lender or your preferred financing sources through this process — see Due Diligence Coordination for how financing timelines integrate with the rest of the closing process.
Underwriting for 1031 Exchange Buyers
Buyers replacing property under a 1031 exchange timeline often need underwriting turned around fast — sometimes within days of identification, given the 45/180-day rules. We prioritize exchange-driven underwriting requests accordingly and can work from a shortlist rather than a single property when the identification window requires it.
Frequently Asked Questions
What is commercial real estate underwriting? It’s the process of testing a property’s financial performance and return potential before a buyer commits capital — modeling income, expenses, financing, and exit assumptions to confirm the deal holds up under realistic conditions, not just the seller’s marketing numbers.
Do you charge separately for underwriting? Underwriting is included as part of buyer-side representation. There is no separate charge to the investor; commission is paid by the seller at closing under the standard buyer-side brokerage structure.
How long does underwriting take? It depends on the property’s complexity and how much documentation is available, but a standard single-tenant net-lease underwrite typically turns around in a few business days. Tighter timelines — particularly for 1031 exchange buyers — can be accommodated.
Can you underwrite a deal I found myself? Yes. Underwriting support is available whether the property came from our off-market sourcing or a listing you found independently on CoStar, Crexi, or LoopNet.