Commercial real estate underwriting: a buyer's reference
How long should underwriting a deal from an OM take? The Reddit question, answered
Why this page says Reddit. People add "reddit" to a search like this because they want the answer from someone with nothing to sell them. Altyst publishes this page and sells commercial real estate underwriting software, so we are not that someone, and we would rather say it here than let you find out at the bottom. We also did not read Reddit to write this: no post, comment, user, thread or vote count is quoted, paraphrased or characterised anywhere below. Here is the straight answer anyway, with our interest declared and every claim about another company linked to the page we read it on.
There is no single honest number, because this is not one job. Underwriting from an offering memorandum is a chain: read the OM, normalise the T-12, build the rent roll, size the debt, run returns, stress them, write the memo. Document quality, asset class and lease complexity are what move each stage. Time your own stages across five deals and you will hold a better number than any average anyone can quote you.
Disclosure. This page is published by Altyst, which sells commercial real estate underwriting software, so read it as interested rather than neutral. Altyst is not affiliated with, endorsed by or connected to Reddit. Everything below can be run in your own spreadsheet. That is the point, not a concession.
Three different jobs get called underwriting
Much of the disagreement about how long this takes is people answering different questions.
- A screen. Does this clear our hurdle at the asking price, on the seller's numbers plus a few corrections. Output: go or no.
- A full underwrite. A model built from the source documents, with your assumptions rather than the broker's, that you would defend line by line.
- A committee package. The full underwrite plus sensitivities, sources and uses, debt quotes, comparables and a written memo.
These are different amounts of work, in that order. Decide which you mean before you ask how long it should take.
The stages, and what each is for
Reading the OM
The OM is a marketing document and the pro forma inside it is a claim, not data. Take the factual layer: unit mix or tenant roster, area, guidance, the T-12 period, in-place versus projected income, capital history. Then list what the package is missing, because each gap becomes a call that stalls a later stage.
Normalising the T-12
Normalising makes the trailing twelve months comparable to how the asset will run under you: strip non-recurring items, annualise partial periods, reclass misfiled lines, swap the seller's management fee and insurance for yours, and tie revenue back to the rent roll. Fix two conventions first and hold them for the whole file. NOI excludes debt service. Capital reserves are treated differently by different parties, so state whether your NOI is before or after a replacement reserve.
Building the rent roll
Unit level for residential, tenant level for commercial. The trap is gross potential rent: GPR is total scheduled rent for every unit or suite at market or asking, vacant ones included, not unit count times average in-place rent. Between GPR and effective gross income sit loss to lease, vacancy, concessions, bad debt and non-revenue units, with other income added back. Keep those as separate lines.
Sizing the debt
Proceeds are the minimum of several tests, not one LTV. DSCR is NOI divided by annual debt service. Debt yield is NOI divided by the loan amount, the test that does not care about your rate. Then LTV or LTC, with amortisation and any interest-only period feeding back into the first test. Lender parameters live in the product term sheet rather than on the marketing page: Freddie Mac's Optigo conventional page is a directory of those sheets. Pull the one for the product you are actually quoting.
Returns
Unlevered and levered cash flows, a hold period, an exit, then IRR, equity multiple and cash-on-cash. Equity multiple is total distributions divided by equity invested. With partners the waterfall is its own build. Record the exit cap as a decision with a reason rather than a default carried over from the last deal, and show what the return does when you move it.
Sensitivities
Vary only what moves the answer: exit cap, rent growth, lease-up or rollover timing, rate. A two-way table usually covers it. More useful than the grid are the break-evens: the exit cap at which the deal stops clearing your hurdle, and the occupancy at which NOI stops covering debt service.
The memo
Easy to cut under pressure and expensive to have cut, because by the time someone asks, nobody remembers where the exit cap came from. Assumption sources, what you excluded and why, the risks you accepted, and what would change your mind.
| Stage | Done means | What multiplies it |
|---|---|---|
| Read the OM | Facts extracted, gaps listed | Image-only PDF, no rent roll, no T-12 |
| Normalise the T-12 | Run rate that ties to the rent roll | Partial periods, reclassed lines |
| Rent roll | Every unit or suite, in-place and market, GPR built up | Tenant leases, many rows, PDF not Excel |
| Debt sizing | Proceeds set by the binding test | Several quotes, supplemental debt |
| Returns | Levered and unlevered, exit stated as a decision | A waterfall with promote tiers |
| Sensitivities | Break-evens known, not just a grid | Rebuilding by hand after each change |
| Memo | Someone else could rebuild the model from it | Assumptions with no recorded source |
What changes the time most
Document quality
This one has nothing to do with the property. A native Excel rent roll with a T-12 that ties is a different job from a photographed rent roll in a scanned PDF and a T-12 that ended two quarters ago. The expensive failure is not the typing, it is finding at the returns stage that income never reconciled and walking the chain back.
Asset class
Multifamily is many rows of one lease shape, so the work scales with row count and stays mechanical. Office, retail and industrial are fewer rows where each row is a contract with its own economics. Self-storage sits closer to multifamily with more unit types. Hotel is an operating business, so departmental revenue and expense replaces the rent build. Development replaces the T-12 with a construction and absorption schedule, a different model rather than a longer one.
Lease complexity
The real reason commercial takes longer than the row count suggests: recovery structure, base years, expense stops and caps, free rent, options, percentage rent, then rollover assumptions with tenant improvements and leasing commissions at each expiry. Altus Group sells this as a capability in its own right: its page for ARGUS Enterprise offers "Lease by lease modeling for a transparent view of all assured income" and the ability to "Model all lease types from around the world", naming office, industrial, retail and multifamily. If your deal has a dozen leases with different recovery structures, the rent roll stage is not data entry, it is the underwrite.
How to get your own number
An average from a stranger is worth less than five measurements of your own process.
- Log columns: deal, asset class, document quality (native, scanned, incomplete), stage, start, stop, blocked on.
- Log the next five deals stage by stage, including the waiting.
- Count rework separately. Rebuilding after a corrected rent roll is not the same cost as building once.
- Keep screens and full underwrites in separate rows. Never average them together.
- Take the median, not the mean, so one pathological deal does not set your expectation.
Count the waiting as well as the building: waiting on a rent roll the broker has not sent, reconciling your NOI to the seller's, re-keying after a revised rent roll arrives, and working out which file on your desktop is current. Those are the blocks easiest to leave out of a total, so measure them before you change anything about the modelling.
A screening pass you can run in your own spreadsheet
Worth doing before anything else, because it stops you spending a full underwrite on a deal that was never going to clear.
- Rebuild GPR from the rent roll, every unit or suite at market or asking, vacant ones included, and understand any gap against the OM's figure before continuing.
- Subtract vacancy, loss to lease, concessions and bad debt as separate lines, add other income, and you have effective gross income.
- Take expenses from the T-12 rather than the pro forma, substituting your own management fee, insurance and taxes on a reassessed basis where that applies.
- NOI is EGI minus operating expenses, with no debt service in it. Say whether a replacement reserve is deducted.
- Test the debt both ways: DSCR is NOI divided by annual debt service, debt yield is NOI divided by the loan amount. Whichever binds first sets proceeds.
- Then ask what exit cap and rent growth you would need at the asking price to hit your hurdle. If that is implausible, stop and keep your afternoon.
Where Altyst fits, and where it does not
Altyst ingests an offering memorandum, rent roll, T-12, lease or a pasted listing link, extracts the figures and builds an editable model: rent roll, normalised T-12, growth and vacancy, lease rollover with TI and leasing commissions, debt sizing, waterfall, DCF, IRR, equity multiple, DSCR, cash-on-cash, scenarios and sensitivities, exported to Excel, PDF or PowerPoint. The AI does the extraction. The arithmetic runs on a deterministic engine, so every figure traces to a source document or an assumption you can edit.
Against the stages above, that compresses the mechanical ones: the rent roll build, the T-12 normalisation, and the rebuild after a revised document arrives. It does not compress the stages that were the actual job, choosing the exit cap and judging rent growth, and it adds one, which is checking the extraction against the source. Anyone claiming software removes the judgment is selling you something, and so are we.
The limits, plainly. Altyst is new in 2026, bootstrapped and small. No free tier and no free trial, so evaluating it costs money: $12 a month for 5 deals and $4 per extra, $24 for 15 deals and $3 per extra, $99 for 75 deals across 5 seats and $3 per extra. It cannot open or produce ARGUS files, and it does not do property management, lease administration, CRM, brokerage listings or debt origination. If a lender or partner requires an ARGUS file, that settles the question and nothing here changes it.
Free, no account: ten calculators including NOI, DSCR, debt yield and IRR, embeddable versions, a ten-year multifamily acquisition model in Excel, and a glossary.
Questions people ask next
Is there a standard number of hours to underwrite a deal from an OM?
No, and a single figure would mislead rather than help. The same analyst on the same asset class faces a different job depending on whether the rent roll arrived as Excel or as a photograph, and on whether the job is a screen or a committee package, so one number does not carry across them. Measure your own stages instead.
What is the difference between a screening pass and a full underwrite?
A screen answers whether the deal clears your hurdle at the asking price, using the seller's numbers with a few defensible corrections. A full underwrite rebuilds income and expense from the source documents with your own assumptions, sizes debt against real quotes, and produces returns you would put your name on.
Why does an office deal take longer than a multifamily deal with more units?
Because the unit of work is the lease, not the row. A residential rent roll is many instances of one structure. A multi-tenant office roll is a set of negotiated contracts with different recovery structures, caps, options and expiries, each needing a rollover assumption with tenant improvements and leasing commissions attached.
What cuts the time most without buying anything?
Ask for the native Excel rent roll and T-12 before you start, as a standing line in your first reply to a broker. A native file removes the re-keying stage and the transcription errors that come with it, and it costs nothing to ask for.
Does underwriting software remove the time or move it?
It moves it. Extraction and recalculation get faster, so the mechanical stages compress. The judgment stages do not, and verification is new work: anything extracted by a model needs reconciling against the source before you rely on it.
Sources
Pages fetched and read while writing this, on 16 September 2026. No Reddit content was read, quoted or summarised.
- Altus Group, ARGUS Enterprise, for the two quoted phrases about lease-by-lease modelling and modelling all lease types.
- Freddie Mac Multifamily, Optigo conventional term sheets, for the point that sizing parameters sit in the individual product term sheets rather than on the landing page.