
Underwriting Games in Multifamily Deals: Cap Rates, IRR “Magic,” and Capital Stack Red Flags
📚 Unlock the secrets to building wealth! My book and 12-module Masterclass cover everything I’ve learned about passive investing and creating financial freedom. Watch it on-demand for FREE: http://thewealthelevator.com/master 🤝 Join the Hui Deal Pipeline Club and get a one-on-one call with me to discuss your investment goals: https://thewealthelevator.com/club The speaker reviews real-life (anonymized) multifamily deal examples to help investors spot misleading underwriting and marketing tactics. Key topics include “manufactured” IRR boosts from aggressive refinance assumptions, unrealistic exit/reversion cap rates (and the difficulty LPs have validating prevailing market cap rates), and mismatches between large CapEx plans and modest rent-bump projections that may signal weak market fundamentals or hidden reserves. They discuss how cap rate compression can inflate paper returns despite being uncontrollable, why comparing discounts to 2021 pricing can be irrelevant, and how debt structure (fixed vs floating, term length, IO, extensions, prepayment penalties) affects refinance and exit risk. Additional red flags include preferred equity ahead of common equity, side-letter complications in the capital stack, and early distributions funded from reserves rather than operations, which can mask weak DSCR. 00:00 Cap Rate Question Setup 00:42 Market Shift Overview 01:21 Manufactured IRR Tricks 03:32 Reversion Cap Rate Games 04:22 Finding Real Cap Rates 07:34 Rent Bumps Vs CapEx 09:35 Discount Hype Reality 10:48 Cap Rate Cycle Bets 11:58 Debt Structure Risks 13:24 Stacking Red Flags 14:54 Preferred Equity Ahead 17:23 Return Of Capital Trap 19:11 DSCR And Fake Cashflow 20:28 Cap Compression Review 21:53 AI Deal Checklist 24:52 Capital Stack Exceptions 26:25 Final Q And Wrap Connect with me: LinkedIn: https://www.linkedin.com/in/lanekawaoka/ Facebook: https://www.facebook.com/TheWealthElevator Instagram: https://www.instagram.com/TheWealthElevator Lane Kawaoka is a developer and multi-family syndicator who owns 10,000+ rental units and is the leader of “Hui Deal Pipeline Club” which has acquired over $2.1 Billion AUM of real estate by syndicating over $200 Million Dollars of private equity and most importantly distributed more than $45M back to our investors since 2016. Check out our Top-50 Investing Podcast, The Wealth Elevator. Hosted on Acast. See acast.com/privacy for more information.















