Multifamily Price Per Unit: Texas vs Midwest Cash Flow Math

In Texas, multifamily price per unit currently runs roughly $115,000 to $125,000 in the deals Joshua Morgan of Playbook Capital Partners underwrites. In the Michigan-Indiana border market where he actually buys, the same metric sits at $75,000 to $80,000 per unit. That gap is the headline, but it isn’t the reason he operates there.

The reason is what those units rent for and whether a team can run them. A $75,000 door renting at $1,000 produces day-one cash flow. A $120,000 door in a market that delivered heavy new supply in 2022 and 2023 may rent for more and still underwrite worse.

This guide walks the full comparison: the per-door and rent numbers on both sides, how a cash-flow-first operator sequences team, market, and buy box, where the deals actually come from, and why fixed-rate debt and a conservative capital stack matter more now than they did five years ago.

From the Real Estate Pros Show

This article draws on an interview with Joshua Morgan of Playbook Capital Partners on the Real Estate Pros Show, hosted by Dylan Silver.

What Price Per Unit Actually Tells You

On its own, multifamily price per unit tells you almost nothing. It’s a denominator looking for a numerator.

Morgan’s own backyard makes the point. Around Austin and Georgetown, the deals crossing his desk price at $115,000 to $125,000 per unit. Across the Michigan-Indiana border — Niles, Michigan and South Bend, Indiana, the area locals call Michiana — comparable apartment units trade at $75,000 to $80,000 per door.

A 35 to 40 percent discount per unit looks decisive until you add the second and third variables. The second is rent, which determines whether the discount is a bargain or just a reflection of weaker income. The third is supply.

Texas delivered a large volume of new units in 2022 and 2023, and that matters at the asset level in ways a spreadsheet doesn’t capture immediately. New deliveries compete for your tenants with concessions. They compress your ability to push rents at takeover. They make a lease-up or a heavy turn schedule slower than your model says.

Morgan’s framing is blunt: why go into a market with a lot of deliveries, at an expensive price per unit, where your rent growth is capped and your takeover is harder?

So the question isn’t “what’s the price per unit.” It’s three questions stacked:

• What does a door cost?
• What does that door rent for today?
• How many competing doors are coming online nearby?

Answer all three and the per-unit number becomes useful. Answer only the first and you’ve learned which market is cheaper, which is not the same as which market pays.

The Rent Side of the Equation

Here are the numbers Morgan quoted for each side.

In the Michiana market, smaller units start around $700 to $800 a month. Two-bedrooms run just over $1,000 up to $1,200. Against a $75,000 to $80,000 acquisition basis, a $1,000 two-bedroom is a materially different asset than the same floor plan at $120,000 a door.

In Austin, a two-bedroom one-bath rents for roughly $1,800. Higher rent, yes. But run the ratio. At $1,800 against a $120,000 basis, you’re collecting about 1.5 percent of purchase price per month. At $1,100 against a $78,000 basis, you’re collecting about 1.4 percent — nearly the same, before you account for the new supply pressing on the Texas rent and the lower cost of living that supports the Midwest one.

That near-parity is the whole argument. The Sun Belt premium you’re paying per door is not buying you a proportionally better rent roll, and it is buying you more competition.

The demand side in Michiana isn’t a great migration story and Morgan doesn’t sell it as one. Nobody is leaving California for Niles, Michigan. What’s happening is shorter-distance movement: Detroit-area residents moving within the state, Chicago-area renters moving down, South Bend residents crossing the border in either direction. City-to-suburb moves, driven by cost and by remote work making a $500-to-$700 monthly premium for proximity to an office hard to justify.

Cost of living is the fundamental underneath all of it. Lower living costs support affordable rents that tenants can actually pay, which is what makes the rent roll durable rather than aspirational.

We look at buying apartment complexes like buying a business. You wouldn’t want to go buy a business that is losing money every month. So we want to make sure that if we’re going to take over an asset, that it’s paying us day one — and then deal with the equity multiplier on the backside like a bonus.

— Joshua Morgan, Playbook Capital Partners

Cash Flow First, Equity Multiplier as a Bonus

Morgan underwrites an apartment complex the way he’d underwrite buying a business — and nobody knowingly buys a business that loses money every month.

Each unit is a stream of income. Income in, minus the expenses of operating the property, minus debt service, equals cash flow. If that number isn’t positive on day one, the deal is a bet, not a business.

More units cuts risk rather than adding it, because one vacancy doesn’t eat the entire cash flow. On a four-unit, losing a tenant is a 25 percent revenue hit. On a 246-unit, it’s noise.

From there the job is raising NOI, because NOI is what the property is worth. Scale the cash flow and the valuation follows. That’s the right order: operate better, value follows, exit is a consequence rather than a prerequisite.

The inverted version is what burned a lot of 2021-vintage deals. The pitch was: it doesn’t cash flow much now, but we’ll scale it and sell for three times as much in five years. Morgan’s view is that this framing screams risk to an investor. His alternative is narrower and more defensible — it already operates at this number, and we think we can operate it better than the last owner.

Dylan Silver put the historical context on it during the conversation: from roughly 2014 to 2020, you could buy a deal wrong and the equity multiplier bailed you out. Post-COVID, a wave of commercial multifamily debt is coming due against properties sitting in negative equity positions, and those sponsors have no good options.

The cash-flow-first structure doesn’t eliminate that risk. It just means the deal doesn’t depend on a sale happening at a specific price on a specific date.

Finding the Deals: Broker Relationships and the Boomer Seller

Morgan’s deals come through broker relationships, not listing sites. His line on the portals: LoopNet and CREXi are where deals go to die.

The mechanic is specific. A long-time owner reaches a point where he might sell but doesn’t want to list. He has a private relationship with someone who could list it, and instead of going to market he asks that broker to quietly feel out a few buyers. The broker calls operators he knows. That call is the deal flow.

The seller profile is consistent: boomer-generation owners who have held 20 or 30 years, properties paid off or close to it, and no appetite for the deferred maintenance stacking up. They’ve cashed out mentally already. They want to take the check and go.

The best version of this setup is not the heaviest value-add — it’s the lightest. Morgan’s preferred find is a property where rents already sit $200 to $300 below market, the physical condition is reasonable, and the owner simply never raised rents. He was fully occupied, the cash flow funded the lifestyle he wanted, and pushing rents would have been a hassle with no upside to him.

That asset doesn’t need a large capital infusion to be rent-ready, which means the spread is available almost immediately.

The execution matters. Morgan doesn’t walk in on day one and announce new rents. He puts something in the unit first — appliances, countertops, light renovation that’s genuinely light but genuinely visible. The tenant sees value added alongside the increase. Same number on the lease, different conversation.

Team Before Market, Then Deal by Deal

The sequence Morgan runs is team, then region, then buy box, then individual deals. Not market research first.

The reasoning is operational. One person taking on an apartment complex has more to manage and maintain than they can handle, so you need people who can execute in that area. And a good operator becomes a bad operator when you put them in the wrong city or stretch them across too much geography — the quality was never about the person, it was about the attention they could give.

So the first question is where the team can actually operate, and what it costs to operate there. Only then do you ask where you want to scale. Without the team, no deal works regardless of how good the numbers look.

Once the team and region are set, the buy box follows — the fundamentals a deal has to meet. Then it becomes case by case. Which deals fit the box well, and which are a stretch?

The stretch is the signal. Morgan’s red flag is the feeling of straining to make the numbers work. The markers exist for a reason; if you’re reaching past them, sit back.

Day to day, the discipline is measuring what matters, with weekly meetings and daily ones when the situation calls for it. The core metrics:

• Occupancy
• Unit turn schedules
• Delinquency in payments

That cadence does two jobs. It keeps minor issues from becoming major ones, and it means the monthly or quarterly investor update is already written — you know the numbers before anyone asks.

Debt and Capital: Fixed Rate, 506(b) vs 506(c)

Morgan uses fixed-rate debt and avoids bridge loans and ARMs.

The logic is about control. When you play the ARM game, you’re playing a game you have no control over — nobody sits in those Fed chair meetings. Given how much money has been printed in recent years, he doesn’t see a realistic path to meaningfully lower rates, and he won’t underwrite a deal that needs one.

We want the numbers to work with the debt the way it is now, and write it conservatively.

Bridge debt and ARMs are the aggressive end of the same spectrum as the equity-multiplier bet. Both push risk onto investors in exchange for returns that only show up if something outside your control cooperates.

On the capital side, Morgan raises from family, friends, and word of mouth built off those relationships. The structure depends on the deal, and it falls under one of two securities exemptions.

• 506(b): requires a pre-existing relationship with each investor. Events you’ve attended and people you’ve met there become the investor pool, because the connection already exists. No cold solicitation.
• 506(c): you can solicit the deal publicly, but every investor must be accredited — a net worth threshold that signals they can assume the risk.

The accreditation requirement in 506(c) exists as protection, so a skilled salesperson can’t put a novice investor in over their head on a deal they don’t understand. Confirm the current requirements with securities counsel before structuring any raise.

The live example: a 246-unit in the Michiana market closing in December, with an $8.5 to $8.6 million raise. A fund covered roughly half, soft commits covered much of the rest, and the remaining need sat below $3 million. A 48-unit in the same town was under negotiation to follow in January.

Frequently asked questions

Is a lower price per unit always a better multifamily deal?

No. Price per unit is only meaningful against the rent that unit supports and the supply pipeline around it. A $78,000 door renting at $1,100 and a $120,000 door renting at $1,800 produce similar monthly collection ratios — the difference shows up in operating costs, rent growth potential, and how many new competing units are delivering nearby.

A cheap door in a market with no rent support or no team to run it is not a deal, it’s an expense.

How much below market should rents be for a value-add apartment deal to pencil?

Joshua Morgan targets properties where in-place rents sit $200 to $300 below market with limited deferred maintenance. That gap is wide enough to move NOI meaningfully without requiring a large capital infusion to make units rent-ready.

The size of the gap matters less than the cost of closing it. A $400 gap that requires a full gut is a worse deal than a $200 gap you can capture with new appliances and countertops.

Should I use fixed-rate debt or a bridge loan on a multifamily acquisition?

Morgan’s position is fixed-rate debt, and he avoids bridge loans and ARMs entirely. His reasoning: rate movement is outside your control, so a deal that only works if rates fall is a bet on the Fed rather than on your operations.

The practical test is whether the deal cash flows with today’s debt pricing, underwritten conservatively. If it needs a refinance at a better rate to work, you’ve taken on risk your investors may not have priced.

What’s the difference between a 506(b) and 506(c) raise for apartment investors?

A 506(b) raise requires a pre-existing relationship with each investor and does not permit general solicitation — your pool comes from people you’ve already met at events and through your network. A 506(c) raise lets you publicly solicit the deal, but every investor must be accredited.

The accreditation requirement in 506(c) functions as investor protection, preventing a persuasive sponsor from placing an inexperienced investor into a deal beyond their capacity to absorb risk. Work with securities counsel on which exemption fits your raise.

What KPIs should I track weekly on an apartment complex?

Occupancy, unit turn schedules, and delinquency in payments. Morgan runs weekly meetings on these, moving to a daily cadence when a situation requires it.

Tracking at that frequency keeps small problems from compounding into large ones, and it means your monthly or quarterly investor update reports numbers you already know rather than numbers you’re assembling under deadline.

The bottom line

Before you compare per-door pricing between two markets, figure out which one your team can actually operate in — that constraint decides more than the spreadsheet does, and it’s the one most investors solve last.