On a recent episode, Dustin sat down with Don Goff, founder of Next Level Multifamily, to talk about underwriting, market cycles, debt, and what investors should be watching as the multifamily market continues to reset.
With more than 20 years of experience in real estate and nearly two decades spent teaching and refining underwriting, Don brings a uniquely analytical perspective to multifamily investing. His engineering background has shaped the way he evaluates deals, but his experience coaching investors has taught him something equally important: underwriting only works when investors understand what the numbers are actually telling them.
For both active operators and passive investors, that distinction matters.
From Engineer to Multifamily Investor
Don’s career in real estate started in an unlikely place: engineering.
With a background in biomedical and mechanical engineering, Don spent approximately seven years working in corporate America. While he enjoyed the technical side of his work, he knew he eventually wanted to build something of his own.
That opportunity came in 2004 when a grade-school friend approached him about looking at a real estate deal. Don had already been following his friend’s progress and was intrigued by what he was building.
That conversation became the beginning of Don’s transition into real estate.
He started with single-family flips, wholesaling and smaller multifamily properties in New England. Eventually, he made the decision to leave corporate America and pursue real estate full-time.
Like many investors, Don also began attending local real estate investment meetings. At one of those meetings, he met multifamily educator Dave Lindahl.
Don’s analytical mindset and willingness to help others quickly stood out. By 2006, just two years after entering real estate, Don became one of Lindahl’s first two coaches.
That experience would ultimately shape much of his career.
Becoming the “Underwriting Guy”
As Don moved from smaller properties into larger multifamily deals and syndications, underwriting became his specialty.
Over nearly two decades, he helped develop and continually refine an underwriting template, reviewed countless deals and coached dozens of investors at a time.
That experience gave Don something particularly valuable: a front-row seat to the numbers behind deals across different markets and different stages of the real estate cycle.
It also reinforced his belief that underwriting doesn’t need to be intimidating.
In fact, one of Don’s biggest strengths is taking something that can feel overwhelming—an enormous spreadsheet filled with assumptions, formulas and financial terminology—and breaking it down into concepts investors can actually understand.
At its core, Don believes underwriting comes back to one fundamental question:
How much cash flow does this property produce today, and what can it realistically become?
That simple question provides a useful framework for evaluating almost any multifamily investment.
A Simpler Approach to Multifamily Underwriting
Don teaches investors to separate where a property is today from where they believe they can take it.
His underwriting approach centers around two primary areas:
1. Acquisition: What Does the Property Do Today?
The acquisition side focuses on the property’s current performance.
Don breaks this into four primary categories:
- Income
- Expenses
- Financing
- Closing costs
Rather than trying to tackle the entire model at once, he recommends working through one section at a time.
Financing, for example, can often be established relatively quickly once you understand the loan structure, leverage, interest rate and amortization. From there, investors can move into income and expenses and begin building the full picture.
The goal isn’t to make underwriting complicated. It’s to create a repeatable process.
2. Projections: What Could the Property Become?
The second part of the analysis looks at the business plan and projected performance over the hold period.
This is where investors begin layering in assumptions around:
- Rent growth
- Occupancy
- Expenses
- Renovations
- Other income
- Capital expenditures
- Future financing
But this is also where discipline becomes critical.
The projections should be grounded in what the property and market can realistically support—not simply what an investor needs the deal to produce.
Start With Good Data
One of Don’s recommendations may be surprising to newer investors: don’t necessarily start with the smallest properties.
He often recommends using properties in the 40- to 50-unit range or larger when learning how to underwrite.
Why?
Because larger properties typically have more complete financial information, including detailed T-12s and rent rolls.
Smaller properties can sometimes have inconsistent or incomplete financial records, which makes it difficult for a beginner to determine whether an issue is with the property itself or simply with the quality of the data.
With a clean T-12 and rent roll, investors can first understand how the property has actually performed under the current owner and then layer their own assumptions on top of that information.
That distinction is important.
The seller’s numbers tell you where the property has been. Your underwriting should explain where you believe it can realistically go.
Teaching Investors to Actually Understand Underwriting
Don has taken that philosophy and built it into the Next Level Multifamily underwriting program.
Rather than relying on a traditional weekend course, his program is designed around repetition, practical application and ongoing feedback.
It includes four primary components:
20 Bite-Sized Training Modules
The program includes 20 training modules, generally running 20–30 minutes each.
Topics range from underwriting fundamentals and acquisition analysis to projections, sensitivity analysis and presenting deals to sponsors, partners and investor groups.
The shorter format is intentional. Don found that investors often struggle to retain information from long, dense training sessions.
Breaking the material into smaller pieces allows students to revisit concepts and build their understanding over time.
Live Deal Reviews
Every two weeks, students participate in a live Zoom call where they can bring deals they’re currently analyzing.
Instead of simply learning theory, they can ask questions like:
- “What looks wrong here?”
- “Would you change this assumption?”
- “Does this expense make sense?”
The benefit extends beyond the person presenting the deal. Everyone on the call gets to learn from a real-world example.
Ongoing Group Support
Students also have access to a group chat where they can ask questions between calls and learn from both Don and other members of the program.
This creates an environment where investors aren’t simply consuming information—they’re actively working through problems together.
An Underwriting Certificate
Don also developed an underwriting certificate at the request of a former student who went on to become a sponsor.
Students complete questions associated with each of the 20 modules, and those who achieve an 80% or better score can earn the certificate.
For sponsors, the program can provide a way to evaluate whether an analyst or junior team member has completed structured underwriting training.
For students, it provides another way to demonstrate their knowledge and commitment when pursuing opportunities with sponsors or investment groups.
What the Last Few Years Taught Multifamily Investors
The conversation wasn’t just about underwriting spreadsheets.
Dustin and Don also discussed what the multifamily industry has learned from the dramatic market shifts of the past several years.
The Floating-Rate Lesson
During the 2021–2022 period, many buyers turned to floating-rate debt because it helped make deals pencil in an extremely competitive acquisition environment.
The problem came when interest rates rose rapidly.
Even with interest-rate caps in place, higher debt costs put significant pressure on cash flow and forced many owners to confront the consequences of aggressive financing decisions.
Don’s approach has generally favored more conservative debt structures, and the recent cycle reinforced why that philosophy matters.
A deal can look attractive on paper, but the financing structure can dramatically change its risk profile.
The lesson: don’t let the debt make the deal look better than the underlying real estate actually is.
Concessions Can Hide the Real Picture
Another major topic was the growing use of concessions.
Rather than reducing advertised rents, many operators have been offering increasingly aggressive incentives, including:
- Several weeks of free rent
- Move-in specials
- Gift cards
- Waived fees
- Other concessions designed to attract residents
Dustin shared an example from North Dallas where a build-to-rent community was offering 10 weeks of free rent plus a $2,000 gift card.
The headline rent might look strong, but the more important question is:
What is the actual effective rent after concessions?
That is the number investors need to understand.
Concessions can be an effective tool for maintaining occupancy, but they can also mask the true level of demand in a market if investors focus too heavily on asking rents.
Don’t Overcomplicate Supply and Demand
Despite all of the data available to investors today, Don believes multifamily ultimately comes back to one of the oldest principles in real estate:
Supply and demand.
When demand is strong and supply is limited, rents can rise.
When a market experiences a significant wave of new deliveries, operators may have to compete for residents through concessions, lower effective rents and other incentives.
One of Don’s recommendations is to keep an eye on building permits and future supply.
You don’t necessarily need to monitor them every day. But checking market-level permitting and construction activity periodically can provide an early indication of what could be coming two years down the road.
That’s particularly important in markets experiencing significant development.
A Market That Is Starting to Reset
The conversation also touched on how dramatically buyer and seller expectations have changed.
Deals that couldn’t get done in 2023 are being brought back to the market with more realistic pricing expectations. At the same time, a broker saying a property has received 20 or more offers doesn’t necessarily mean there are 20 serious buyers.
Dustin shared an example where a deal received approximately 25 offers, but the broker acknowledged that only about five were truly credible.
He also described a property with a whisper price around $41 million where Momentum submitted an offer of approximately $33 million—an offer Dustin initially considered extremely aggressive—and still ended up in the best-and-final round.
The takeaway isn’t that every property is suddenly a bargain.
It’s that buyers need to be willing to walk away when the numbers don’t work.
The market is changing, and investors who feel pressure to “win” a deal can easily overpay in an attempt to do so.
The Opportunity Is in Preparation
For investors who are frustrated by the current market, Don’s advice is simple:
Don’t use a difficult market as an excuse to stop learning. Use it as an opportunity to get better.
For active investors and aspiring sponsors, that means:
- Underwrite deals consistently
- Build relationships with brokers
- Develop relationships with property managers
- Attend local real estate events
- Participate in apartment associations and industry groups
- Learn how different markets behave
- Study deals even when you aren’t planning to buy them
The investors who prepare during slower periods will be better positioned when opportunities become more attractive.
And for passive investors, the same principle applies.
A Different Standard for Returns
One of the most important reminders from the conversation was that the returns investors experienced during the long multifamily boom shouldn’t necessarily be considered the baseline.
Doubling your money in two or three years may have happened frequently during certain periods, but that doesn’t make it a normal expectation for multifamily investing.
For LPs, the focus should be on understanding the sponsor, the business plan, the financing structure, the assumptions and the downside risks.
Multifamily can still offer an attractive combination of cash flow and long-term appreciation, but successful investing requires patience and realistic expectations.
A temporary pause in distributions or a difficult operating period doesn’t automatically mean a deal is bad. Real estate is cyclical, and strong operators need to be able to navigate the difficult parts of the cycle as well as the good ones.
The Biggest Takeaway: Underwrite the Deal, Not the Story
Perhaps the biggest lesson from Dustin’s conversation with Don Goff is that successful multifamily investing isn’t about finding the most exciting deal.
It’s about understanding the business underneath the investment.
- What does the property earn today?
- Are the income and expense numbers reliable?
- What is actually driving the projected growth?
- How much new supply is coming?
- What happens if rents don’t grow?
- What happens if expenses increase?
- What happens when the debt costs more than expected?
And most importantly:
Does the deal still work when the assumptions aren’t perfect?
The past few years have reminded the multifamily industry that markets don’t always behave the way an underwriting model expects them to.
For investors, that’s not necessarily a reason to step away.
It’s a reason to become better underwriters.
The investors who come through this cycle with stronger analytical skills, more conservative assumptions and a better understanding of risk will be better prepared for whatever the next cycle brings.
Learn More from Don Goff
To learn more about Don Goff and Next Level Multifamily, visit nlmultifamily.com.
Don can also be reached at don@nlmultifamily.com or 401-450-5200.
For the full conversation, check out the Momentum Multifamily YouTube channel.