Invest InlandNW: September 2026

Most owners we sit down with can tell us their rents, their expenses, and roughly what their property is worth. Most owners cannot tell us their return on equity.

That matters, because when you look only at the asset, you are stuck with the two paths we covered last month: out-operate a softening market, or decline by default. When you zoom out and look at your equity instead, more options appear.

We dig into that third option in this edition of Invest InlandNW.

The Rollercoaster Ride, In Review

Over the last two editions, we walked through the six-year rollercoaster Inland Northwest multifamily has been on.

Values and operations decoupled at the peak (‘20-’22) as buyers paid for projected income. Then values and operations recoupled as interest rates, capital flows, and operations normalized (‘23-’25). Today, buyers and lenders are underwriting real, in-place income again, making every $1 of NOI worth roughly $16 in value and $12 in refinance proceeds.

This recoupling, plus current market conditions, leaves every owner at a fork in the road on their existing assets. Those two paths are:

• Decline by Default: The market is drifting down in small ways across both the capital stack and nearly every line of property operations. Rents have softened, new supply is abundant and competing on price, all while expenses and capital needs keep climbing. Doing nothing to drive the performance of your property is not neutral, it's a slow ride down to declining cash flow.
• Out-Operate the Market: Even in a down market, you can roll up your sleeves and actively manage income, expenses, capital projects, and your on-site team. Doing so translates to real NOI growth and cash flow today. Out-operating a declining market is also a real, ongoing effort, week after week.

For many owners in the Inland Northwest, these are two not-so-great options: watch performance erode or taking on a second job to protect it when you invested in multifamily for passive income in the first place.

But it turns out those are not your only two options.

Your Return on Equity

Your third option is to get off the rollercoaster altogether. Instead of optimizing this asset to perfection, you can reposition the equity trapped in the asset.

That starts with one number: return on equity, or ROE. Most owners measure performance against the cash they originally invested, or monthly cash flow, or any number of metrics. Most of them tell you how the investment has performed over time, but not what the current equity is earning today compared to alternative investments.

Return on equity looks past the property and asks what your actual dollars are earning.

The math is simple:

• Current Equity = today's value - loan balance - sale costs
• Return on Equity = Annual Cash Flow ÷ Current Equity

Here is what that looks like on a mid-size property:

• $1.5M (current equity) = $3M (today's value) - $1.3M (loan balance) - $200k (sale costs)
• 4% (return on equity) = $60k (annual cash flow) ÷ $1.5M (current equity)

Across the ~30,000 units we've reviewed in the last few years, most owners are earning between 3.7% and 5.2% on their equity.

And most owners are not happy with that level of return on their money. Very few investors got into real estate to earn single digits.

And here is the uncomfortable part: out-operating the market might protect that return, or push it toward 5.5% or 6%, but in today's market it's unlikely to produce a double digit ROE. Ultimately, out-operating is a lot of work for a marginal gain.

Meanwhile, current market conditions determine what that equity is worth, and it remains tied up in an asset at risk of declining by default.

Getting Off the Ride

If your equity is earning less than 6%, the question becomes: Where could my equity earn more, with less work?

Here are the options worth considering today:

• 1031 exchange into newer construction. New construction multifamily in the Inland Northwest is trading at 5.5% to 6% cap rates, and a newer asset is far easier to out-operate in the market, with fewer risk factors like CapEx.
  • If you can take a 4.5% ROE on 1970s construction and turn it into a 6% in newer construction, your return is higher, the asset is better positioned to beat the market, and may realize depreciation advantages, meaning benefits across the board.
• 1031 exchange into a different asset class. Trade apartment operations for a property type whose demands better fit the next decade of your life. This could mean NNN or industrial, or even passive investing like in a DST vehicle.
• Sell and lock in a yield. CDs, bonds, and treasuries are earning roughly 5.5% today with zero operational work. You just lock it in and ride out the cash flow. There are obvious trade-offs (depreciation, growth, etc.), but if you're optimizing for passive returns, then this is an option worth considering.
• Carry seller financing. If you have a low loan balance, a seller-financed sale can convert your equity into 5.5% to 6% on day one, boosting the value when you offer seller financing, and spread out some capital gains.

Each option comes with different trade-offs, and none of these options is automatically the right answer. Ultimately, you have to start with current operations and values, and then weigh the options.

What it comes down to is this: Do you want to roll up your sleeves and out-operate on the multifamily rollercoaster ride, or is it time to get off the ride and optimize your invested equity to your overall investing goals?

Is Your Equity Earning Its Best Return?

As you saw from the ROE math above, the first step is to really pin down current market values so you can actually calculate your return on current equity, with real-time market feedback.

And our team can help!

Our valuation analysis is grounded in the 30,000+ units of Inland Northwest multifamily we have underwritten in recent years. From there, we outline your actual return on equity and lay out the alternatives that meet your goals, side by side.

Our role is to provide you with information. If you have never looked at what your equity is actually earning, it's worth a conversation.

Simply reach out to our team and we will run the return on equity math on your property.

This edition wraps our three-part Rollercoaster Review of Inland Northwest multifamily: the six-year ride, the two paths forward, and the option to get off the ride entirely.

Thank you for riding along.

We will see you in October with a fresh look at the market.