The 20 to 60 unit apartment band is genuinely less competitive than larger multifamily, but not because nobody knows about it. It is less competitive because institutional buyers want 100 to 300+ units and small private buyers usually stop around 20, and the middle requires real operating capability that neither group wants to build.
Chris Wise runs Wise Capital out of Louisville, buying Class C value-add apartments in that exact band across Kentucky, Ohio, Indiana and northern Tennessee. His team screens roughly 200 properties a week to find deals that fit a narrow filter.
What follows is the deal math in that band: where the NOI increase actually comes from, what an acquisition filter looks like when you underwrite a 24-36 month hold but plan to exit in 15-18, how the HUD switch to NSPIRE inspections changed the operating load, and what it actually costs to raise capital for a fund this size.
Key takeaways
- Institutional buyers target 100+ or 300+ units and most private buyers stay under 20 units, leaving the 20-60 band thinly bid — but Midwest cap rates have compressed over the past couple of years as more buyers moved in.
- On one property, Wise moved NOI from roughly $80,000 to about $175,000, and says the jump had less to do with rents than with the expense line: property management fees, how RUBS are calculated, and whether the seller was actually collecting on water and power.
- Wise’s fund underwrites 24-36 month holds but requires a business plan executable in 15-18 months. If the plan does not fit that window, they pass.
- Paid capital raising math: roughly $245,000 in ad spend over a 90-120 day window to raise about $5 million, which might produce 50 meetings — or might not. Wise spends about $150 a year on apartment-level marketing instead and runs on direct outreach.
- Two vendor failures cost him about $1 million in three months and another $600,000. The result is a deliberately slow vendor vetting process, few vendors total, and verification as standing practice.
From the Real Estate Pros Show
This article draws on an interview with Chris Wise of Wise Capital on the Real Estate Pros Show, hosted by Joseph Meacham.
Why 20 to 60 Unit Apartment Investing Has Less Competition
The gap is structural, not secret. Large funds and institutions are built to deploy into 100-plus or 300-plus unit deals — a 34-unit Class C building does not move the needle on their fee load or their asset management overhead. Below that, most private buyers top out around 20 units, because past that point you need a real management function, not a part-time landlord.
“It’s typically too small for the largest. They want 100-plus, 300-plus,” Wise says. “And you’re not getting outbid or getting bidding wars with the larger institutions because they’re focused on a higher unit count.”
That leaves a band where you are usually bidding against other operators rather than against capital. The tradeoff is that the deal only works if you can actually run it, which is why the band stays open.
Wise Capital’s footprint is Midwest: Louisville, Cincinnati, Indianapolis, and south to the Gallatin area north of Nashville. His team evaluates roughly 200 properties a week across that geography to fill a pipeline of four to five closings.
The one warning worth taking seriously is that the pricing advantage in the Midwest is thinning. Wise spent years telling investors the region’s numbers were stronger than the coasts, and over the last couple of years the market caught on. Cap rates have started compressing.
“Now that we’re seeing cap rates kind of get reduced and be more competitive… the rates get a little bit more difficult,” he says. He was not seeing that compression for the previous five to seven years. If you are underwriting Midwest small multifamily on 2021 cap rate assumptions, the exit math has moved against you.
Where the NOI Actually Comes From: The Expense Side
On one property, Wise took NOI from about $80,000 to roughly $175,000, with a forward-looking number closer to $179,000. He is explicit that rents were not the main driver.
“It’s not so much having to do with just rents, it has to do with expenses,” he says. “Probably the most overlooked and most misunderstood expense [is] property management fees, and then how RUBS are calculated.”
That is the practical checklist for underwriting a Class C building in this band:
- Property management fees. What the seller is paying, what the fee is actually calculated on, and what the line becomes under your structure.
- RUBS methodology. How the ratio utility billing system is calculated at the property today, and whether it holds up.
- Utility recovery. Is current ownership collecting on water and power at all? What is their stated strategy versus what the statements show?
- Deferred maintenance accuracy. The expense line you cannot fix after closing.
Wise runs management in-house — one person owns it with a team underneath. “I tell people, no one loves your baby like you, and so that’s how we operate.” His stated per-property figures reflect that structure: roughly $27,000 in monthly revenue per property against about $20,000 in NOI, averaged across how his team handles expenses.
Those margins are aggressive by third-party-managed standards, and they are the whole argument for the band. You do not get them by finding a mispriced building. You get them by owning the management function, which is exactly the capability a mom-and-pop buyer under 20 units has no reason to build.
If you want to raise about $5 million, give it a 90 to 120 day window, you’re going to have to spend about $245,000 up front in ad spend. Now, that could get you 50 meetings. And hopefully it brings in $5 million. Or it could not.
— Chris Wise, Wise Capital
Underwriting Criteria and Realistic Hold Periods
Wise Capital tracks seven internal metrics he does not disclose, but the governing constraint is public and worth copying. The deal has to hit a required return and exit multiple, and the business plan has to be executable inside 15 to 18 months — even though the fund tells investors 24 to 36 months.
“There should be an actual plan that we can execute on in that window,” he says. “And if it’s not, then we move on.”
That is a useful discipline for anyone underwriting small multifamily value-add. The 24-36 month figure is the promise to capital; the 15-18 month figure is the operating plan. Building a gap between them means a slipped renovation schedule or a soft leasing quarter does not immediately put you in breach of what you told investors. Wise’s actual average hold has run 15 to 18 months: once the plan executes and the exit number is there, they sell.
The heaviest weighting in the filter goes to deferred maintenance accuracy. Get it wrong on a 40-unit Class C building and the expense-side thesis from the previous section collapses. Wise built a predictive maintenance company, ForVue, in part to solve this for his own acquisitions — forecasting maintenance cost forward so the exit can be planned around it rather than surprised by it.
On unit mix, expect small: roughly 46% of the units he sees in this band are one-bed/one-bath, with most of the balance two-bedroom and the occasional three-bed unit that does not change the rent roll. Underwrite for one- and two-bedroom demand, not family-sized product.
Operating Class C: HUD, NSPIRE, and Relationships With Agencies
HUD’s move to NSPIRE inspections is the live operational risk in Class C right now. Wise says the change did not show up at his properties until April, though some operators saw it in March, and the process is materially different from what came before.
“It’s a completely different process,” he says. “So understanding what the difference is, how are they implementing this, what is this process for corrections if there needs to be corrective measures.” He was still working through it at the time of the interview, and so were a lot of other owners. If you hold Section 8 tenancy and you have not mapped the corrective-measures workflow under NSPIRE, that is unresolved exposure on your rent roll.
His counter to that risk is relationships, built in person and built early. Wise meets social workers and the inspectors themselves rather than operating off the handout.
“It’s much easier to have a relationship with social workers and even the inspectors to understand what are you looking for, what are you trying to see and prevent — versus just a PDF handout that they give to everybody and you’re living off of.”
The sequencing matters more than the sentiment. Before closing on a property in a new city, his team is already meeting the local Section 8 office, veterans organizations, and groups like the Archdiocese. “We start to get involved with the organizations before we close on the property, so that it’s not a chasing game.”
Every major market handles these processes differently. Doing that work after closing means carrying vacancy while you learn.
The Capital Raise Math Behind Small Multifamily Funds
Wise previously built and sold a marketing and sales agency and built his own conversational AI, so his position on paid capital raising comes from having run the numbers rather than from avoiding them. The numbers are ugly.
“If you want to raise about $5 million, give it about a 90 to 120 day window, you’re going to have to spend about $245,000 up front in ad spend to get that,” he says. “Now, that could get you 50 meetings. And hopefully it brings in $5 million. Or it could not.” Agency fees sit on top of that.
He considers Meta unusable for capital raising as of 2025, citing platform policy limits on the category and, more fundamentally, no control over who sees the ad. “If you can’t control it or at least see the metrics, it does no value to me.” LinkedIn is marginally better in that you are not classified the same way, but he stops short of calling it the answer.
So his team runs on direct outreach — phone work, existing relationships, conferences. At the property level, ad spend is about $150 a year, because tenant flow comes through the agency and nonprofit relationships instead of paid channels.
The real bottleneck in his funnel is not lead volume. It is accreditation self-certification, which is regulatory and cannot be engineered away. Once an investor clears it, Wise says the fund closes about 85%.
Institutional capital is a different curve. With RIAs and family offices there is due diligence and there are committee meetings, so the timeline stretches well past what a single conversation with an individual investor requires.
The Trust-But-Verify Lesson That Cost Seven Figures
Wise’s most expensive lesson was people, not deals. He lost about $1 million in three months to someone who was stealing from him, and another $600,000 to someone who claimed to be doing work they were not doing.
“Those are hefty lessons and almost debilitating lessons at the time,” he says. “We didn’t have that much money back then. So that was everything.”
The policy that came out of it is narrow and boring, which is why it works: work with as few vendors as possible, vet them over a deliberately long period, and treat verification as standing practice rather than a response to suspicion. “We are that example of a very long J curve for any vendor,” he says. For an operator running renovations through contractors across four metros, that slowness is the control.
The reporting cadence backs it up. Wise Capital has documented SOPs for every function, not just the major ones. He receives daily reports twice a day, weekly reports Friday at 5, and reviews them with his team early Saturday. Monthly financials land around the 3rd rather than the 1st, so anything settling on the 31st is actually posted and the numbers are not distorted by a pending item that got caught by a weekend or holiday.
None of this is exotic. It is the operating infrastructure that lets a six-person W-2 team plus contractors run a multi-market Class C portfolio in-house — and it is the same infrastructure requirement that keeps casual buyers out of the 20-60 unit band in the first place.
Frequently asked questions
Is the 20-60 unit apartment space really less competitive than larger multifamily?
Yes, for structural reasons. Institutional buyers and large funds are built to deploy into 100-plus or 300-plus unit assets, and most private buyers stop around 20 units because past that you need a real management function. That leaves the middle bid mostly by other operators rather than by institutional capital.
The advantage is not permanent. Chris Wise notes that Midwest cap rates have started compressing over the last couple of years after five to seven years of little movement, which means more competition and tighter exit math than the band offered recently.
How do you increase NOI on a Class C apartment building without raising rents?
Work the expense line. Wise took one property’s NOI from about $80,000 to roughly $175,000 and says rents were not the main driver. His named levers are property management fees — which he calls the most overlooked and misunderstood expense — how RUBS is calculated, and whether current ownership is actually collecting on water and power.
The largest single lever in his structure is running management in-house rather than paying a third party. That is also the hardest to replicate, which is part of why the band stays less competitive.
How long should you plan to hold a value-add small multifamily deal?
Wise underwrites 24 to 36 months for investors but requires a business plan that can be executed in 15 to 18 months. If the plan does not fit that shorter window, the deal gets passed on.
His actual average hold has run 15 to 18 months. The gap between the operating plan and the promised hold period is deliberate — it absorbs renovation delays and slow leasing without breaking what was told to capital.
What changed with HUD inspections under NSPIRE and how does it affect Section 8 landlords?
HUD switched to the NSPIRE inspection standard, which Wise describes as a completely different process from what preceded it. He saw the practical shift hit his properties around April, though some operators reported it in March, and says many owners were still learning the differences — particularly the process for corrective measures when an inspection turns up deficiencies.
The practical step for Section 8 landlords is to map the corrective-measures workflow before an inspection, and to meet local inspectors and social workers in person rather than relying on the written guidance alone.
How much does it cost to raise capital for a real estate fund using paid ads?
By Wise’s numbers, roughly $245,000 in upfront ad spend over a 90 to 120 day window to raise about $5 million, plus agency fees if you use one. That spend might produce around 50 meetings — or it might not, and the money is gone either way.
He considers Meta unworkable for capital raising given 2025 policy limits and the lack of audience control, and only marginally rates LinkedIn. His team raises through direct outreach and existing relationships instead, with the real bottleneck being investor accreditation self-certification, after which he reports an 85% close rate.
The bottom line
If you are moving into this band, build the operating capability before you build the pipeline: in-house or tightly controlled management, an accurate deferred maintenance number, and a documented agency and vendor process. The pricing advantage in the 20-60 unit space exists because that work is hard, and it disappears the moment you buy a building you cannot run.
