The #1 underwriting mistake killing value-add deals right now: using flat rent comps instead of unit-mix-adjusted comps.

If you're underwriting a value-add multifamily deal in this rate environment, here's a mistake I keep seeing operators make — and it's quietly wrecking IRRs.

The mistake: Pulling a market rent comp of "$1.50/sqft" and applying it uniformly across every unit type in the property.

Why it fails: Your 1-bed/1-bath units and your 2-bed/2-bath units don't renovate to the same rent premium. A $12k reno on a 1-bed might only justify a $150/mo bump, while the same $12k on a 2-bed with in-unit W/D could justify $250+/mo — because the tenant pool competing for 2-beds has more disposable income and fewer alternatives in most secondary markets.

The fix — a 3-step unit-mix underwriting check:

1. Segment your comps by unit type, not just by property. Pull 3-5 comps per floorplan, not one blended number for the whole asset.

2. Calculate renovation ROI per unit type separately. Reno cost ÷ incremental monthly rent = payback period. If a unit type's payback period exceeds ~40 months, deprioritize it in your renovation sequencing.

3. Weight your pro forma NOI by your actual unit mix, not an average. A property that's 70% 1-beds should not be underwritten off 2-bed comps just because they're easier to find.

Quick gut-check math: If forced appreciation = NOI increase ÷ market cap rate, and your unit-mix-blended NOI assumption is off by even 8-10%, that error compounds directly into your exit valuation. On a $5M deal at a 5.5% cap rate, an 8% NOI miscalculation is roughly a $350K-$400K valuation swing.

Run your next deal through this before you finalize the reno budget — it'll change which units you renovate first and how much you're willing to pay at close.

What comps are you seeing for reno-to-rent premiums in your market right now?