In the current multifamily landscape, “hope” is no longer a viable investment strategy.
For the past several years, the industry leaned heavily on aggressive rent growth projections and compressing cap rates to make deals pencil. However, as noted in recent market outlook reports from Freddie Mac, interest rate volatility and shifting supply dynamics have redefined the playing field.
At Altos Holdings, we aren’t just looking for assets; we are looking for a Moat.
What is the “Moat” Stress Test?
We have formalized a defensive underwriting thesis for 2026. For an asset to enter our portfolio, it must survive a “Gauntlet” of stressors that would break a traditional pro forma.
1. The 0% Rent Growth Floor We model every acquisition with 0% rent growth for Years 1 and 2. While we believe in the long-term strength of our target markets like Tampa and Orlando, we must account for temporary supply saturation. If the deal doesn’t cash flow at a standstill, it doesn’t fit our box.
2. The +100bps Exit Cap Expansion We don’t bet on rates dropping to save our exit. We assume a 100-basis-point expansion on our exit cap relative to our entry. This ensures our investors are protected even if market liquidity remains tight during our hold period.
3. The 20% Expense Shock From Florida property taxes to skyrocketing insurance premiums, “standard” expense ratios are a thing of the past. We stress-test our O&M with a 20% immediate shock to ensure the asset maintains its debt service coverage ratio (DSCR).
Our 2026 Focus: Class B Multifamily
Our target remains disciplined:
- Assets: 50–200 Units (Class B / B-)
- Vintage: 1980–2010 (Garden-style)
- Execution: 30-day Due Diligence | 15-day Close
- Capital: Programmatic Equity from Institutional & UHNW Partners
A Message to Our Broker Partners
We know the “Moat” is a high bar. But for the right asset, we offer absolute certainty of execution. Our capital is pre-vetted against this thesis. When we issue an LOI, we aren’t “re-trading”—we are ready to close.
If you have a Class B asset in Florida or Iowa that survives the Gauntlet, let’s build a moat together.