How To Evaluate Small Multifamily Deals In Round Rock

Are you eyeing a duplex or fourplex in Round Rock but unsure how to judge if the numbers work? You are not alone. With new supply across the Austin metro and shifting rent trends, smart underwriting matters more than ever. In this guide, you will learn a clear, Round Rock‑specific process to evaluate 2–20 unit deals with confidence, from rent comps and vacancy to expenses, taxes, zoning, and financing. Let’s dive in.

Why Round Rock for small multifamily

Round Rock blends strong job access, suburban convenience, and relative affordability compared to central Austin. The City of Round Rock estimates a population of 142,302 as of January 2026, while U.S. Census QuickFacts placed the July 1, 2024 estimate at 135,359. That scale supports steady rental demand across product types. You also benefit from proximity to major employers and attractions that bring year‑round visitors and workforce stability.

At the metro level, the Austin–Round Rock area saw heavy multifamily deliveries in 2022–2025. That pipeline pushed advertised rents down and occupancy into the low‑90% range in many submarkets during 2024–2025. You should account for this with conservative rent, vacancy, and lease‑up assumptions when you underwrite Round Rock properties. See the summary of metro conditions in the Austin multifamily update.

The takeaway is simple. Round Rock can be compelling if you buy on realistic numbers and plan for some rent softness while new supply is absorbed.

Start with the right numbers

Before you run any returns, your data must be clean and complete. The seller’s documents are your foundation.

Gather core documents

Request and review:

• Unit‑level rent roll and signed leases
• Trailing‑12‑month income and expense statement (T‑12)
• Recent utility bills and vendor invoices
• Property tax bills and insurance declarations
• Property management reports and maintenance logs

Use the rent roll and T‑12 as your baseline. Reconcile them to bank deposits when available, and flag any discrepancies for explanation. For a practical overview of what to request and how to audit it, read this due diligence guide.

Read the rent roll like an underwriter

Go line by line and confirm:

• Unit ID, bed/bath and size
• Contract rent, concessions, move‑in date
• Lease start/end and month‑to‑month status
• Security deposit and any outstanding balances
• Utilities paid by tenant vs. owner
• Late payment history or credits applied
• Any non‑market or related‑party leases

Totals on the rent roll should match the T‑12 and, ideally, deposits. Mismatches require a clear explanation before you rely on the income.

Project income conservatively

Your goal is to build a realistic effective gross income (EGI).

Step 1: Set market rent

Compare in‑place rents to live, unit‑matched comps. In Round Rock, different data vendors cover different property types, so cross‑check. For example, Zillow’s Round Rock listing average was recently about $2,056 across all rental property types (Feb 14, 2026), while RentCafe’s Round Rock apartment average was lower at roughly $1,399 (Feb 9, 2026). The gap reflects coverage differences rather than a single “true” rent number.

• Check current listings on Zillow’s Round Rock rental trends and the RentCafe Round Rock averages.
• Match by unit type, size, finish level, and location proximity.
• Note concessions like free first month, which may signal softer submarket demand.

Step 2: Apply vacancy and credit loss

Model a stabilized vacancy rate that fits the property’s age, location, and the broader supply environment. In a period of elevated new deliveries across the Austin MSA, lean toward the conservative side and test a higher vacancy scenario as well. Keep your final assumption in the mid‑single digits unless the asset condition or location justifies more.

Step 3: Add other income

Other income can move the needle on small buildings. Include parking, laundry, pet rent, storage, and utility bill‑backs if they are customary for similar units in Round Rock. Verify any charges shown in the rent roll against deposits and the lease language.

Estimate expenses with discipline

Well‑supported expenses protect you from optimistic pro formas.

• Common operating categories: property taxes, insurance, owner‑paid utilities, maintenance and repairs, turnover and make‑ready, landscaping, management fees, advertising, admin, and payroll if applicable.
• Exclude debt service and income taxes from operating expenses when you calculate NOI.
• Use the property’s actual P&L whenever possible. If a category looks thin or is missing, benchmark it against local vendor quotes.

As a check, many small‑multifamily investors look at the Operating Expense Ratio. OER equals operating expenses divided by gross revenue. Learn the definition and mechanics here: Operating Expense Ratio. Heuristics vary by building age and utility setup, but for older duplexes and triplexes, a total expense load near 40–50% of EGI is commonly modeled. Also plan for recurring capital reserves, often budgeted per unit per year, plus any near‑term CapEx flagged in inspections.

Turn EGI into returns

With income and expenses in place, you can measure performance.

Calculate NOI, cap rate, and GRM

• NOI equals Effective Gross Income minus Operating Expenses.
• Cap rate equals NOI divided by purchase price.
• Gross Rent Multiplier (GRM) equals purchase price divided by gross scheduled rent. GRM is a quick screen and should not replace a full NOI analysis.

Compare cap rates to recent small‑multifamily sales in Round Rock and nearby Austin submarkets with similar age and condition. Focus on stabilized NOI when you compare.

Check DSCR and cash‑on‑cash

If you plan to finance, your lender will care about the Debt Service Coverage Ratio. Many small‑balance investor loans look for DSCR around 1.20 to 1.25, though requirements vary by lender and program. See a summary of common 2–4 unit loan approaches and DSCR underwriting in this loan guidelines overview.

Cash‑on‑cash return depends on your down payment, closing costs, reserves, and any renovation spend. Model a 12‑month view that includes realistic turnover and lease‑up timing.

Stress test your pro forma

Markets move. Test for downside before you write an offer.

• Rents 5–10% lower than base case
• Vacancy 2–3% higher than base case
• Expenses 10–20% higher than base case
• Tax reassessment to purchase price

If the deal still covers debt and meets your return targets under stress, you have a sturdier investment.

Taxes, zoning, and rules that matter

Laws and levies are local. Confirm these items for every Round Rock property you evaluate.

Property taxes: budget them correctly

Round Rock’s published FY 2024–2025 city tax rate is 0.360000 per $100 of assessed value. Your actual tax bill is the sum of city, county, school district, and any special districts. Start with the city’s property tax page and pull the parcel’s current bill on the county portal. Then forecast a potential reassessment at or near your purchase price if values have moved.

Zoning and legal unit count

Round Rock’s Development Code includes multifamily zoning tiers such as MF‑1, MF‑2, and MF‑3. If you plan to add units, convert garages, or change use, verify zoning, setbacks, and parking requirements. Confirm that the current unit count is legal and permitted, especially on older properties that may be nonconforming. Start with the city’s planning page for development code guidance and maps: Round Rock Planning.

Texas landlord‑tenant basics that affect operations

Under Texas law, a written notice to vacate is typically required before filing an eviction case, and many leases specify a minimum three‑day notice for nonpayment or other defaults unless stated otherwise. Timelines and procedures are dictated by statute. Review Chapter 24 of the Texas Property Code here: Texas eviction statute. This context helps you underwrite collection risk and turnover time. For implementation, consult a local attorney or eviction specialist.

Financing paths for 2–4 units and small buildings

Your loan type influences what the deal must earn.

• Owner‑occupant 2–4 units. Conventional and FHA programs allow you to buy a duplex, triplex, or fourplex if you will live in one unit. Program limits, required reserves, and mortgage insurance differ by loan type. Ask your lender about current rules for 3–4 unit self‑sufficiency tests and property condition.
• Investor loans. Non‑owner occupants often use conventional investor loans, portfolio bank loans, or small‑balance commercial loans that center on DSCR. Down payments and rates are usually higher than owner‑occupant loans. Clarify whether the lender uses in‑place or market rents to qualify and what vacancy or expense cushions they apply. See DSCR context in this loan guidelines overview.

Due diligence checklist and red flags

Use this quick list as you evaluate Round Rock deals:

• Rent roll, signed leases, deposit ledger, and aged receivables
• T‑12 income and expense statement; reconcile to bank statements
• Property tax bills; check for any special assessments
• Insurance declarations and claims history
• 12 months of utility bills; verify separate meters or ratio billing
• Full physical inspection: roof, structure, foundation, HVAC, plumbing, electrical, pest
• Title commitment, survey, easements, liens
• Zoning compliance and permits; confirm legal unit count
• Market rent survey and nearby small‑building sales comps

Red flags to probe:

• Rent roll that does not match deposits or the T‑12
• One‑time capital projects listed as operating expenses
• Heavy concessions used to keep occupancy up
• Deferred maintenance not reflected in the pro forma
• Unpermitted units or lingering code violations

For a deeper walk‑through of document review and reconciliation, use this practical due diligence guide.

Quick Round Rock underwriting example

Here is a simple, illustrative framework you can adapt to any 2–20 unit property:

• Gross scheduled rent: Assume four units at $1,650 per month. Annual GSR equals 4 × 1,650 × 12 = $79,200.
• Vacancy and credit loss: Model 6% during a supply‑heavy period. EGI equals $79,200 × 0.94 = $74,448. Add other income if supported by comps and leases.
• Operating expenses: Use the actual T‑12 if available. As a benchmark cross‑check, 45% of EGI would be about $33,501.
• NOI: $74,448 minus $33,501 equals $40,947.
• Cap rate: If the asking price is $720,000, cap rate equals $40,947 ÷ $720,000, or about 5.7%.

Sensitivity check:

• If rents fall 5%: GSR becomes $75,240. At the same 6% vacancy and 45% expense ratio, NOI drops to roughly $37,471 and cap rate falls to about 5.2%.
• If expenses run 10% higher than base: Expenses become about $36,851 and NOI falls to around $37,597.
• If vacancy ticks up 2 points to 8%: EGI becomes $72,864. With 45% expenses, NOI is near $40,075.

This quick pattern shows how small changes can move your returns. Use live Round Rock comps for rents and rely on the seller’s P&L, vendor quotes, and property tax forecasts for expenses.

Put local knowledge to work

Small multifamily in Round Rock can deliver durable cash flow if you buy on the right numbers and respect today’s supply cycle. Anchor your pro forma in the rent roll and T‑12, cross‑check rents with multiple sources, budget taxes and maintenance honestly, and stress test your returns. When you want a second set of eyes, a local advisor with underwriting, vendor, and lending relationships can speed up your decision and help you negotiate with confidence.

Ready to underwrite your next duplex, triplex, or fourplex in Round Rock? Schedule a consultation with Rodney Bustamante Real Estate to walk through live comps, expenses, and a custom financing plan.

FAQs

How do I find true market rent for a Round Rock duplex?

• Cross‑check unit‑matched listings on sources with different coverage, such as Zillow’s rental trends for Round Rock and the RentCafe Round Rock averages, then adjust for size, finish, and location.

What vacancy rate should I use when underwriting in 2026?

• Start with a mid‑single‑digit stabilized vacancy and run a higher scenario because the Austin MSA has added significant new supply; choose final assumptions based on asset age, location, and current leasing performance.

How do property taxes in Round Rock impact my NOI?

• Use the city’s published rate of 0.360000 per $100 of value as one part of your total bill, then add county, school district, and any special districts and budget for reassessment near your purchase price using the city tax page.

Do I need to confirm zoning for a small multifamily purchase?

• Yes; verify the site’s zoning designation and that the current unit count is legal and permitted using the city’s planning resources at Round Rock Planning.

What DSCR do lenders look for on small multifamily in Texas?

• Many small‑balance investor programs target DSCR around 1.20 to 1.25, but criteria vary by lender; review examples and questions to ask in this loan guidelines overview.