Over the past several years, the Reno-Sparks multifamily market has experienced one of the largest apartment construction booms in its history. Thousands of new units entered the market, vacancy increased, rent growth slowed, and investment transaction activity fell sharply as interest rates rose.

The apartment market appears to be entering a new phase where new supply is rapidly declining, renter demand remains healthy, and elevated borrowing costs continue to suppress acquisition competition. While today’s environment presents challenges for sellers and developers, it may represent one of the most attractive acquisition windows in years for investors.

This report examines the current state of the Reno-Sparks apartment market through four questions:

• Is renter demand healthy?

• Is new apartment supply likely to remain constrained?

• What is happening in the investment sales market?

• What does all of this imply for multifamily values over the next several years?

Demand Remains Healthy

Apartment performance ultimately depends on one thing: people needing places to live.

Reno continues to benefit from several long-term demand drivers that remain largely intact despite higher interest rates.

The region has diversified considerably over the past decade. While gaming remains an important employer, employment growth has expanded into advanced manufacturing, logistics, healthcare, technology, higher education, and distribution.

The Tahoe Reno Industrial Center continues attracting employers, healthcare employment continues expanding, and the University of Nevada, Reno provides a consistent pipeline of students, faculty, and professional employment.

At the same time, homeownership has become significantly more expensive.

Higher mortgage rates combined with elevated home prices have pushed monthly ownership costs well above apartment rents for many households. As a result, many residents who may have previously purchased homes remain renters for longer periods.

Demand has not disappeared.

Instead, demand has become increasingly supportive of workforce housing.

Supply Has Fallen Off a Cliff

While demand has remained relatively healthy, supply has been the defining story over the last several years.

Developers responded aggressively to rapid rent growth following the pandemic by initiating a wave of apartment construction across Reno and Sparks.

Thousands of units were delivered in a relatively short period. In 2023, over 10,500 units were delivered. As expected, vacancy increased and rent growth froze or decreased as those apartments entered lease-up.

However, the market is now reaching an inflection point.

The number of apartments currently under construction has fallen dramatically from its recent peak, and relatively few new projects are beginning construction.

The reasons are largely economic, not demographic.

Developers have become increasingly reluctant to begin projects because today’s construction costs and financing environment make it difficult to earn acceptable returns.

I will demonstrate the actual math that supports this point next.

Supply Will Remain Constrained: The Economics of New Development

Perhaps the most important question for investors today is not how many apartments were recently built. It is how many apartments can realistically be built over the next several years.

Why is this a more important question? Because the Reno-Sparks MSA is currently 94-98% occupied depending on the source data you look at – meaning the post-Covid supply wave is over and those units are absorbed, so what is next?

Consider a simplified example.

Assume a developer can deliver a new apartment community for approximately $400,000 per unit, including land acquisition, construction, financing, permitting, professional services, and carrying costs.

Side Note: To support this number of $400k per unit, I have a hard construction quote from a very reputable builder in Reno for $300k per unit that consists of just hard costs for a plot of land that already had foundations, utilities, and permits. The bid is $300k exclusively for the hard costs of the building with pre-completed plans. Another developer would have to acquire land, pay for permitting, design, etc. and have other carry costs that generally average about 25-30% of the total build cost – hence $400k per unit assumption.

If the developer targets a 6.0% stabilized yield on cost, each apartment must generate approximately $24,000 of annual net operating income.

Assuming operating expenses consume 35% of revenue, each apartment would need to generate approximately $3,080 per month in rental and ancillary income to hit the required yield.

Average apartment rents in Reno remain well below that level, and even many newly constructed luxury communities lease for considerably less.

Another way to view the math is by asking a different question:

What level of development costs do today’s rents actually support?

At approximately $2,500 per month, a newly constructed apartment supports only about $325,000 per unit of development cost under the same assumptions.

That leaves an estimated $75,000 per-unit feasibility gap. For most projects, the economics simply do not work. This is why the construction pipeline has fallen so dramatically.

Unless construction costs decline materially, rents increase substantially, or developers accept significantly lower returns, new apartment deliveries are likely to remain limited.

That is the ideal market condition for owners of existing apartment communities.

Transaction Activity Has Slowed

The investment sales market has experienced a similar adjustment (not just in Reno but nationwide).

Higher interest rates have increased borrowing costs while reducing loan proceeds.

Many owners remain anchored to pricing achieved during 2021 and early 2022, while buyers underwrite using today’s financing environment.

The result has been a meaningful decline in transaction volume. Fewer properties have traded, and price discovery has been slower than in previous market cycles.

Yet reduced transaction volume often creates opportunity. When capital is abundant and financing is inexpensive, competition tends to compress returns. Today’s market looks very different.

Many investors remain on the sidelines. That creates opportunities for buyers with available capital and operational expertise.

A Compelling Alternative:

One of the more compelling aspects of today’s market is the relationship between replacement cost and acquisition pricing.

Most existing apartment communities continue trading materially below the estimated cost of constructing comparable new properties.

Unlike ground-up development, these properties typically provide immediate cash flow while offering opportunities to increase value through renovation, improved operations, and professional management.

For investors willing to execute operational improvements, today’s pricing may offer an attractive combination of current income and long-term appreciation potential – particularly while it does not make mathematical sense to build new apartments.

Looking Ahead

No market moves in a straight line. Economic growth could slow down, interest rates may remain elevated long into the future, and apartment fundamentals will continue to fluctuate quarter to quarter.

However, today’s market appears materially different than it did just two years ago.

The apartment construction wave that pressured occupancy and rent growth has largely run its course. Existing deliveries have been substantially absorbed, with Reno-Sparks occupancy once again ranging from approximately 94% to 98%, depending on the data source. At the same time, the development pipeline has contracted dramatically, leaving relatively few new projects expected to deliver over the coming years.

Perhaps most importantly, the economics of new development remain challenging. As demonstrated earlier in this report, today’s construction costs and achievable rents make it difficult for many new apartment projects to generate acceptable returns. Unless construction costs decline meaningfully, rents increase substantially, or developers accept materially lower yields, new supply is likely to remain constrained.

Basic economics suggest that when demand remains healthy while new supply slows, existing apartment communities should benefit. That trend may already be emerging. Following the temporary slowdown created by the recent supply wave, the Reno-Sparks market has posted positive rent growth over the last three quarters, suggesting fundamentals are strengthening as excess supply is absorbed.

Interest rates continue to weigh on transaction activity, but that may be creating one of today’s greatest opportunities. Elevated borrowing costs have reduced buyer competition and slowed investment sales, allowing disciplined investors to acquire quality apartment communities at pricing levels that were difficult to achieve during the highly competitive market of 2021 and early 2022.

History suggests that some of the best investment opportunities emerge before a market appears fully recovered, not after. By the time rent growth accelerates, transaction volume rebounds, and financing becomes more favorable, competition often returns and pricing adjusts accordingly.

Conclusion

The Reno-Sparks multifamily market appears to be at an attractive point in the investment cycle.

Demand remains supported by a diversified local economy, continued job growth, and the increasing cost of homeownership. Occupancy has remained healthy as the market has absorbed the largest apartment construction cycle in its history. Meanwhile, the future development pipeline has contracted sharply as higher construction costs and financing expenses have made many new projects economically infeasible.

The combination of high occupancy, limited future supply, and improving rent trends creates a favorable backdrop for owners of existing apartment communities. Recent quarterly data suggests this transition is already underway, with rent growth returning as supply pressures continue to ease.

At the same time, elevated interest rates continue to suppress transaction activity and reduce acquisition competition. While these conditions have created challenges for sellers and developers, they represent an attractive entry point for well-capitalized investors with a long-term perspective.

Markets rarely offer the combination of improving operating fundamentals and reduced investment competition. Today, Reno-Sparks appears to offer both.

Perhaps most importantly, this does not appear to be a case of investors trying to “catch a falling knife.” The market is not deteriorating. It is improving. The knife is no longer falling. Occupancy has remained strong, the recent supply wave has largely been absorbed, rent growth has turned positive over the last three quarters, and the future development pipeline has contracted dramatically. Yet acquisition pricing and transaction activity have not fully adjusted to these improving fundamentals.

For investors focused on acquiring well-located workforce housing below replacement cost, today’s environment may represent a compelling opportunity to invest before stronger operating performance becomes fully reflected in apartment values.

By Jack Bessette, Founder & Managing Partner, Rifle Peak Capital

The market is turning the corner. The supply wave that pressured the market over the previous three years appears to be getting absorbed and there is data to back it.

Reno/Sparks appears to have successfully absorbed the bulk of its recent supply wave, and the market now looks positioned for another growth cycle.

A year ago, the tone of the market felt different.

The Q1 2025 report discussed newly delivered projects taking “a prolonged amount of time to reach stabilization,” while highlighting more than 1,350 units under construction and nearly 4,450 units planned across the market. Operators were competing aggressively for tenants, concessions were elevated, and there was a legitimate concern that the delivery pipeline could pressure fundamentals for an extended period of time.

Fast forward one year, and the data tells a different story.

In Q1 2025, Reno/Sparks average vacancy sat at 2.66% with average rents of $1,681 per month.

By Q1 2026:

· Vacancy compressed to 2.09%

· Average rents increased to $1,798/month ($117 increase)

· Quarterly rents grew 2.22% from Q4 2025 to Q1 2026

· Concessions declined materially

· The construction pipeline shrank significantly

That combination indicates a market that is healthy and positioned to continue improving.

Falling vacancy and rising rents at the same time usually signal that demand is beginning to outpace available supply again. And the fact that this happened while several large projects are still actively leasing up makes it even more notable.

The concession data provides a very clear signal.

In Q1 2025, 37.17% of surveyed projects were offering concessions.

By Q1 2026, that number declined to 30.33%.

That tells me operators are slowly regaining pricing power. Landlords typically do not pull concessions unless tenant demand is improving. I expect the percentage of properties offering concessions to continue to decrease over the next year.

Especially given the supply side is becoming much more favorable.

The Q1 2026 report shows only 904 major units currently under construction across Reno/Sparks. That is a dramatic shift from the development environment the market was dealing with a year ago. High costs to build paired with higher interest rates will keep new supply growth stifled.

And some submarkets are already showing exceptionally strong fundamentals.

East Sparks stood out the most to me (the same submarket that my first deal is located in).

In Q1 2025:
• Average rent: $1,823/month
• Vacancy: 2.17%

One year later in Q1 2026:
• Average rent: $2,008/month
• Vacancy: 1.39%

That is a very strong move in 12 months from an already strong occupancy market.

For long-term multifamily investors, I think this is exactly the type of setup we want to see. The market endured the difficult phase of the cycle where supply growth pressured concessions, occupancy, and rents. But instead of fundamentals breaking, the market absorbed it.

Now deliveries are slowing, vacancy is tightening, concessions are declining, and rents are beginning to move upward again.

To me, Reno/Sparks looks less like a market struggling with oversupply and more like a market that has worked through it, turned the corner, and is poised to perform well.

For anyone interested in reading the surveys, here is a link to all the Johnson Perkins Griffin LLC surveys → https://jpgnv.com/

Written by Jack Bessette

Founder & Managing Partner, Rifle Peak Capital

Dallas, TX. Fall 2021.

You are sitting in a conference room with property managers, asset managers, and decision makers. Everyone congratulates each other on the good work we are all doing. Year-over-year rent growth is up 21%. Everyone is a genius. Texas real estate market is euphoric.

Deals trade at aggressive cap rates. Cap rate spreads between product types are nonexistent. A 2005 vintage light value add deal? 4% cap rate. 1980s vintage heavy value add? 4 cap. 2020 delivered luxury class A? You guessed it, 4 cap. Who cares. The market is hot.

Part 1: Interest Rates

Then Jerome Powell hits the brakes.

On March 16^th, 2022, the Federal Reserve delivers its first rate hike.

“Inflation is much too high.”

“Ongoing increases… will be appropriate”

JPow says the Fed is going to raise rates. At first, nobody panics. The assumption is that maybe rates settle around ~2%. Deals are still performing. Occupancy is high and rents are still growing.

However, transaction volume is coming to a standstill with interest rate uncertainty.

Buyers can no longer underwrite pricing to where sellers need to exit causing a massive bid-ask spread. Most owners are not desperate enough, or don’t have the foresight to sell, so they hold on hoping for better days ahead. “survive ‘till ‘25” becomes the line passed around the multifamily community at this time.

The smart owners begin to plan ahead and run downside scenarios. Some run cash flow shortfall projections, call capital, buy interest rate hedges, sign longer leases. Some refinanced to lower leverage more stable debt, often with a significant cash injection.

These were scary times compared the the previous few years, but they were manageable. Most groups had not realized any losses yet. And while market sentiment was down, it was not completely depressed.

The funny thing is that The Fed told us what they were going to do, but we did not believe them.

January of 2023, I am sitting at CREFC Conference in Miami with my boss. I am sipping a pina colada at the Loews Miami Beach Hotel pool. We were meeting with my boss’s old boss, a senior credit executive at a well known mega company from New York.

He had just come out of a seminar given by Federal Reserve officials. The takeaway from the seminar was simple, “we are going to continue to raise rates for the foreseeable future.”

We laughed because that statement was not the sentiment in the room. Lenders, investors, and sponsors had convinced themselves that the Fed would ease up soon, probably because nobody wanted to face the alternative - that if the Fed kept raising rates, we’d all be screwed on our pre rate-hike investments.

That was the moment it clicked for me. We were in trouble. Texas was still looking strong fundamentally. But that was about to change too.

Part 2: Cracks Begin to Show

At first, the only problem with Texas apartments was a capital stack problem from rising interest rates.

As time went on, market participants battled their own capital stack issues and took actions to protect their deals and investors. Meanwhile, however, the Dallas apartment market was starting to show cracks.

What was just a capital stack issue driven by interest rates was exacerbated by the changing Texas fundamentals. Occupancies slowly began to decline. Rent growth stagnated and then began to decline. Overall asset performance, which up until this point was great, became a second problem.

Investors, lenders, and owners were quick to throw blame around. But the fact was that the market was becoming soft, quickly. And it was turning into an operational nightmare for apartment owners.

Adding onto this was inflation hitting the income statement via expense growth. What was a $350 per unit insurance premium in 2019 was $1,000 per unit in 2024. Where payroll was $1,200 per unit per year in 2019, it was $1,800 in 2024. Further, maintenance, upgrades, and renovations doubled in cost over the same period. Deals that penciled at $8,000 per unit in capex were now $15,000+.

At one point CPI inflation hit 10 or 11% year over year, and real estate operators felt every bit of it.

Now you had both sides working against you; revenue declining and expenses increasing. A bad formula.

Part 3: Supply Boom

Let’s rewind a few years and briefly explain the environment leading up to this. The 2020 Covid-19 shock pushed interest rates to effectively 0%. Simultaneously, the Fed dramatically increased M2 monetary supply by buying treasuries and mortgage-backed-securities, pumping cash into the system. Put simply, this led to a massive flood of liquidity.

All that readily available and cheap money led to a construction boom. Add on the fact that Texas had some of the best fundamentals in the country and some of the easiest laws and regulations around real estate development – it makes sense that developers would develop there. Which is exactly what happened en masse.

Development projects that started in 2021 to 2023 began delivering from 2023 to 2025. Somewhere around 500,000 new apartments were delivered in Texas alone in the five years leading up to 2026. Roughly half a million new apartment units. In any market, a flood of supply hurts pricing. Apartments are no different. This is the mechanism behinds the cracks that started to show in Part 2.

With roughly half a million new apartment units absorbing, competition got tougher and everyone suffered (except for the actual renters who lived in the apartments). New apartment deliveries were not hitting underwritten rents and gave concessions to get tenants in the door. Class B tenants were able to take advantage of this and move up into A class apartments because they were getting a deal with free rent concessions.

As a result, the Class B apartments suffered greatly and lost pricing power. B class apartment managers were forced to lower rents and offer concessions to maintain occupancy. They pulled tenants up from the C class apartments who could now afford lower rents and concessions offered by the B class apartments.

Overall, everyone felt it and no product type was sheltered from the effects of the massive new supply boom. Overall occupancy rates in Dallas fell below 90%, and almost all of the 20%+ rent growth that caused euphoria in 2021 was given back.

Part 4: Where are we now?

In a tough place.

In 2022, the Secured Overnight Financing Rate was effectively zero. By 2024 it was 5.5%, meaning with a 300 bps spread, your debt payment went from 3% to 8.5%. There has been some relief however as SOFR is around 3.6% today.

Other expenses grew with inflation as well. Simultaneously half a million new units were delivered.

Operators couldn’t catch a break. Texas is still working through these issues as vacancy remains high and rent growth is still flat or negative. The data points to high delinquency rates, many foreclosures, and lots of total equity wipe outs.

Investors have been waiting on the sidelines to take advantage of this distress, but for the most part, most are not ready to put their money where their mouth is and transactions are still few and far between compared to historical norms.

A major repricing is occurring, but it is taking a lot longer than people expected. Even with billions of dollars of “dry powder” that investment companies are sitting on, most have not found pricing low enough yet to jump back in, at least with any meaningful scale.

It will likely soon become a very attractive market to buy distressed and significantly repriced deals, but it needs to play out first. Expect more equity wipe outs, more foreclosures, and more pain through 2026.

Part 5: Wrapping up, what do we learn from this?

Conditions like this are a reminder to go back to simple investing principles.

Discipline and risk management are essential. Easy to say in hindsight but if an investment relies on historically cheap capital or unusually high rent growth to perform, it may be a fragile deal.

Just as a rising tide lifts all boats, the opposite is also true. Even the best will struggle when they are swimming upstream. Don’t fight the macro.

Secondly, supply and demand is everything. Luckily for Texas, renter demand remains strong throughout this period. People are still moving to Texas due to job creation and corporate relocations. However, there still simply is too much new supply that the market must work through.

Most investors did not anticipate the quickest rate hikes in history or the overall effect of new supply. As a result, billions of dollars will be lost.

Lastly, it makes me excited to be investing in the Reno market at a time when new supply pipeline is limited and rates are already high. If my deals work on today’s fundamentals, they likely will not be hindered by the same factors detailed in this article.

Written by Jack Bessette

Founder & Managing Partner, Rifle Peak Capital

In my first issue, I outlined my strategy of targeting long-term, non-institutional owners of 16–100-unit multifamily properties. Since then, I have been actively working on the strategy; pulling ownership records, underwriting assets with limited information, and sending letters of intent.

I have sent 19 offers this year (44 days). Offer prices ranged from $2mm to $17mm and from $90k per unit to $200k per unit.

Here’s what has happened so far.

Pattern #1: “I am never a seller”

Not surprisingly, there is a lot of inventory that simply isn’t available. Many of these buildings are family businesses. The owner’s kids grew up learning to collect rent and manage properties. It paid for college, weddings, retirement, lifestyle, etc.

For some, it is a legacy asset, a hobby that throws off cash flow. A daily routine. A reason to drive by the property every day. It is emotional. And it is not for sale.

One owner told me matter of factly, “I am never selling.”

This is useful information. A “no” keeps me from wasting time. My CoStar spreadsheet shows over 100 properties in the market matching my criteria. Realistically, maybe 10 are available at any given time. And I will find them.

Sourcing off-market deals takes patience.

Pattern #2: “Not at that price”

The second pattern is more nuanced. Commonly, the response was not exactly a “no,” but a “not at that price.”

In one instance, a broker I am working with shared an offer at $5.5mm (from another buyer) with an owner who claimed she would never be a seller. She laughed as if it were a personal slight at that price. I submitted through the same broker on the same property, and in-person the owner said she’s not interested until the broker told her $8.5mm is the offer price. Then the tone shifted immediately.

The owner began to consider the price, and ultimately has decided to not sell now, but at least we moved to some engagement from total dismissal.

The reality is that many owners are not sellers, but they are not irrational.

They may not want to transact at a market value but would absolutely transact at an above market value. This creates the bid-ask spread you’ll often hear discussed in real estate.

From my conversations, owner pricing expectations remain anchored to 2021 peak pricing. The era of near-zero interest rates, abundant liquidity, and aggressive cap rate compression. Owners have stuck to those data points.

As such, sometimes my offers can be offensively low to someone anchored to a different environment, especially when owning real estate is an emotional endeavor for many owners.

The key insight here is that there are prices that make economic sense for a buyer today and the price that makes emotional sense for an owner. Those numbers are often far apart.

Pattern #3: Silence

The third pattern is silence. No response, counter, or acknowledgement of any kind. Just ghosted.

Honestly, I respect this move. From an owner’s perspective, there is no urgency and no reason to entertain a conversation they don’t want to have. They don’t need capital. They are not under pressure. Why engage?

For me, it is a reminder that this is a long game. At my prior company, I had stretches of sending 50+ offers before one hit and turned into a deal, and we did 45 deals in six years. It can be a numbers game.

Further, sometimes an owner who ghosts you in February 2026 will remember you in February 2027. When or if they decide to explore a sale, you already have a foot in the door.

Many of the deals we closed at my prior company took months and even years from the first contact to signed PSA. This business rewards persistence more than urgency.

Takeaways

After 44 days and 19 offers sent, a few things are clear.

Discipline matters. It is very easy to justify stretching and overpaying just to get a deal done (and make some fee money). But this is the long game. Compounding works if you start with a rational basis. Overpaying to create momentum is not momentum, it is extra risk masquerading as progress. Rifle Peak Capital will not share the same fate as the long list of companies that did volume for volume’s sake and overpaid to do it (Google Tides Equities).

Feedback is valuable. I have a clearer sense of seller psychology and a better understanding of pricing expectations. I have a sharper underwriting filter. And importantly, I have a growing pipeline of owners who at least know my name. In an illiquid asset class like small balance multifamily, relationships and timing matter.

What next?

I will keep sending offers on every property in town until something sticks.

I will stay in front of and revisit with owners who said, “not now.” I will continue to track properties systematically.

I will refine assumptions and keep hunting for true mispricing rather than forcing a transaction.

While the goal is to close something quickly, it is more important to close something that is right and fits my investment criteria and long-term objectives.

I am staying positioned to strike when a good opportunity presents itself. And I am positioning myself to create good opportunities.

More soon.

Written by Jack Bessette

Founder and Managing Partner, Rifle Peak Capital

This opportunity involved a small portfolio totaling 75 units across three properties in Reno, Nevada. The assets ranged from mid-1960s vintage to mid-1990s construction and had been owned by the same family for more than 25 years.

Ownership had recently transitioned through an estate. The current owners were not local, not real estate professionals, and had little involvement with the properties. Management oversight was minimal, rent increases had been rare, and tenant tenure was unusually long. From an acquisition perspective, this checked many boxes.

Why I Liked the Deal

The ownership profile was compelling. Long-term hold, low engagement, and clear motivation to sell tend to create opportunity.

Operationally, the properties were stable but sleepy. Occupancy was strong, rents lagged the market, and capital improvements had largely been limited to what was necessary rather than strategic. Some HVAC units had been replaced, but interiors such as flooring were 15+ years old. Tenant turnover was far lower than what you would expect at a professionally managed property, which explained much of the rent gap. Most tenants had lived at the properties for more than a decade.

One of the assets consisted of approximately 2,600 square foot townhome-style units with attached garages leasing for roughly $1,300 per month in a market that supports closer to double that figure.

On paper, this looked like an ideal value-add opportunity driven by professional management and targeted renovations.

Where the Deal Broke

“You make money when you buy.”
— Unnamed real estate mentor

The deal ultimately broke because the asking price already reflected the outcome of the business plan.

Purchase pricing assumed renovated units, higher rents, normalized expenses, and a stabilized operating profile. In effect, the market was asking me to pay today for improvements and rent growth that had not yet occurred. My underwritten exit value five years out, after substantial renovations and performance improvements, was only marginally higher than the current asking price.

That left no room for value creation. Renovations, lease-up pacing, expense normalization, and capital timing all had to go right just to justify the basis. In other words, the upside was fully priced in.

The Price That Would Have Worked

Pricing guidance was approximately $14 million, equating to a sub-3% cap rate. I offered $10.5 million, or roughly a 4.6% cap rate. Still tight, but more realistic given the scope of work required.

At the marketed price, I would have been doing all of the work and assuming all of the execution risk simply to own an asset at roughly a market cap rate. In contrast, I could buy newly built product at a similar cap rate with materially less execution risk.

The deal would have worked if I were compensated for that execution risk. At my offer price, I projected the portfolio could stabilize to approximately a 7.5% yield on total cost, providing a meaningful margin of safety and an above-market yield once stabilized.

The Lesson

This deal was not broken. It was simply priced for a buyer willing to underwrite execution risk aggressively.

My process is designed to do the opposite. I look for pricing that creates a margin of safety to absorb execution risk rather than assume it away.

We’ll see if this deal trades. The seller may come back with revised expectations. If that happens, I’ll be waiting at the same price.

—

Written by Jack Bessette
Founder & Managing Partner, Rifle Peak Capital

I target 16–100 unit multifamily properties in Reno, Nevada that are owned by long-term, non-institutional “mom and pop” owners. This segment offers pricing and operational inefficiencies that are largely absent in institutional-quality assets.

Why “Mom and Pop” Owners

Low basis is the foundation. The longer an owner has held a property, the lower their basis typically is. Many of these owners acquired assets 20 to 30+ years ago, often when a 50-unit apartment traded for approximately $2,000,000, or $25,000 per unit. In many cases, the associated debt is minimal or fully paid off, meaning a sale today represents a meaningful liquidity event rather than a marginal pricing decision.

Operations are sub-optimal, not broken. Rents in these properties often lag market by a wide margin. Take a property I offered on called Murray Manor as an example, a 46-unit property built in 1965. Renovated and actively managed units in this submarket lease for approximately $1,200 to $1,600 per unit. Murray Manor’s current average rent is roughly $675.

This gap exists because ownership has historically prioritized high occupancy, uninterrupted cash flow, and minimal capital expenditures. As a result, the property is fully occupied with long-term tenants who have rarely, if ever, experienced rent increases and are paying rents that are $500+ below market. This reflects a very conservative operating philosophy rather than gross mismanagement.

Property condition is dated but repairable with capital. Long-term owners generally maintain what is essential and little beyond that. Mechanical systems are often well maintained because functionality matters to tenants, particularly in workforce housing. A tenant may prioritize reliable heat in the winter far more than a modern kitchen backsplash. This dynamic often results in assets with solid bones and dated interiors, which creates an efficient opportunity for targeted value-add renovations.

Institutions avoid this size range. Institutional investors would often pursue these same assets if they were 300 units rather than 30 to 50. However, sub-$10 million equity checks are not meaningful for multi-hundred-million-dollar funds. As a result, competition among sophisticated investors with true value-add execution capability is limited.

Conversely, properties below 16 units attract a different buyer profile. Duplexes through small apartment buildings can often be acquired by individuals using personal balance sheets, which increases competition and unpredictability at that end of the market.

How I Target These Properties

I pursue multiple channels to generate deal flow, including broker relationships, listing services, and direct conversations. That said, relying solely on marketed deals does not produce sufficient volume or consistency to build a durable business. The most compelling opportunities often never formally reach the open market.

Recently, I compiled a list of every multifamily property in Reno between 16 and 100 units that has not traded in 20 years or more using publicly available records. From there, I narrowed the universe based on location and physical condition to assets I would realistically pursue. This resulted in a list of 41 properties.

I then partnered with a broker I trust and respect and reviewed each property individually to gather additional context on ownership history and potential motivation. From there, I conducted a preliminary underwriting pass using a combination of public and private data sources, including rents, unit sizes, condition, submarket performance, comparable properties, and prevailing cap rates.

I involve my property manager early to estimate a baseline expense ratio and then pad those assumptions by approximately 10 percent to remain conservative. Each deal is then run through my model with estimates for closing costs and capital expenditures related to maintenance, repairs, and renovations.

Pricing Discipline and Yield on Cost

The primary metric driving my pricing is unlevered yield on cost. I target stabilization at approximately 7.50%. This is roughly 200 basis points wider than current market cap rates and provides meaningful downside protection.

At this yield, value has been created providing for optionality. The asset can be held for long-term cash flow, refinanced to return a significant portion of invested equity, or sold depending on market conditions.

Once pricing and underwriting are solid, I submit a blind letter of intent. Blind LOIs can be particularly effective with long-term owners who have spent decades deflecting broker outreach and have little interest in running a formal marketing process or sharing confidential information.

A blind LOI signals seriousness and allows the seller to bypass a traditional sales process. While the goal is acceptance, more often it opens a dialogue that leads to better information, tighter underwriting, and a more precise negotiation.

I began this process last week and will be sending several LOIs per week. More to come on the results of this strategy.

I am sharing this approach publicly because the most productive real estate conversations tend to happen outside of marketing decks. Writing forces clarity in thinking, and transparency creates better alignment over time. If you find this useful, you are likely the type of investor or operator I enjoy learning from as well. I look forward to sharing how this strategy evolves in 2026 and beyond.

Written by Jack Bessette, Founder and Managing Partner, Rifle Peak Capital.