At Altos Holdings, our Real Estate Deal Underwriting is designed to prioritize capital preservation over deal volume.
In the current 2026 landscape, deal flow is easy. My inbox is flooded with offerings every morning. But in a market defined by shifting cap rates and the “hangover” of 2021’s cheap debt, the goal isn’t to find a deal—it’s to avoid a disaster.
This month, I looked at over 50 “opportunities” across our target growth corridors. I rejected every single one of them.
Here is exactly why I said “No,” and what it tells us about the state of the market right now.
1. The “Hopium” Pro Forma
I am still seeing “value-add” plays where the broker assumes 5% rent growth year-over-year for the next five years.
- The Reality: While workforce housing is steady, the “double-digit” rent spikes of the early 2020s are over.
- The Altos Rule: If a deal only pencils out by assuming aggressive rent growth that outpaces local wage growth, it’s not an investment—it’s a gamble. We underwrite for reality, not “hopium.”
2. The “Bridge Loan” Trap
Many of the assets hitting the market right now are “distressed,” but not because the building is failing. They are failing because the debt is failing. We’ve seen several deals where the current owner is forced to sell because their 3-year floating-rate bridge loan is maturing, and they can’t refinance at 2026 rates. We are closely monitoring the current federal funds rate trends from the Federal Reserve, which recently held steady at 3.5%–3.75%, to ensure our underwriting remains insulated against the ‘higher-for-longer’ environment.
- Why I Walked: Some of these owners are trying to sell at a price that covers their debt, rather than what the asset is actually worth. We buy for value, not to bail out a previous owner’s bad financing.
3. The “Amenity War” Mirage
I looked at two “Class A-” properties that were being pitched as premium assets.
- The Issue: They were located in submarkets with a massive pipeline of new luxury construction coming online.
- The Altos Rule: We focus on the Class B Moat. When high-end apartments are overbuilt, they start offering “two months free” to attract tenants. This “trickles down” and hurts the Class A- market. We stick to the functional, essential housing where there is zero new supply being built.
Discipline is our Greatest Asset
Rejecting 50 deals isn’t a sign of a slow month; it’s a sign of a rigorous filter.
At Altos Holdings, we are looking for a specific intersection: Essential housing, in a supply-constrained market, with fixed-rate debt that allows us to sleep at night.
We are 100% focused on capital preservation. If that means looking at 500 deals to find the one that meets our standards, that is exactly what we will do.