Episode Overview:

In this value-packed episode of The Ironclad Underwriting Podcast, host Jason Williams and guest Frank Patalano break down the essential return metrics that every investor and operator must understand. From outdated expectations around IRR to the rise of AAR and the importance of cash-on-cash return, this conversation helps listeners sharpen their analytical toolkit. Whether you're raising capital, analyzing a deal, or preparing your next pitch, this episode gives you a no-fluff foundation on how returns really work, and how to spot misleading projections before it’s too late.

📌Topics Covered:

✅Why IRR is both useful and misleading

✅The shift from IRR to AAR and cash-on-cash in today’s market

✅Understanding how refis and capital events skew return metrics

✅The growing importance of equity multiple

✅How assumptions and timelines impact projected returns

✅The role of preferred returns in today’s capital stacks

✅Red flags in overly optimistic pro formas

✅Aligning investor expectations with actual deal structure

💬 Key Quotes:

✅“You shouldn’t really ever put a refi into your business plan, but you should plan to do a refi when it makes sense.”

✅“Cash-on-cash tells you about the stability of a deal, if the cash flow is consistent, that's where passive investors can breathe easy.”

✅“You can’t eat equity. You need a balance between appreciation and liquidity.”

🎧 Connect with Jason:

✅ LinkedIn

✅ https://IroncladUnderwriting.com

✅Linktree

🎧 Connect with Frank:

✅LinkedIn

📖 Episode Overview

In this episode, Jason and Frank pull back the curtain on the most manipulated areas of underwriting: revenue assumptions and operating expenses.

They explore how pro formas can be engineered to look too good to be true, and how savvy investors can spot the red flags. From market rent games to unrealistic expense ratios, they break down what ethical underwriting really looks like in today’s market.

📌 Topics Covered

✅ Differences between market rent, in-place rent, and effective rent

✅ Revenue assumptions: Loss to Lease, Economic Vacancy, Other Income

✅ Underwriting manipulation: common tactics used by “bad actors”

✅ Expense benchmarks and what’s actually reasonable

✅ Operating expense ratios: understanding when numbers don’t add up

✅ How investors should challenge and verify assumptions

✅ Knowing when a pro forma is too good to be true

💬 Key Quotes

✅ “Revenue is the most commonly manipulated line item in underwriting—and the easiest to hide.”

— Frank Patalano

✅ “If your model shows a 35% expense ratio on a multifamily deal, you better have a really good story.”

— Jason Williams

✅ “Good underwriting is about creating a model that can fail gracefully—not just look great on paper.”

— Jason Williams

📚 Resources Mentioned

✅ NMHC Income & Expense Survey – industry-standard benchmarks for multifamily OPEX

✅ IRR Matrix Reports – cap rates, NOI, and return assumptions by market

✅ T12 & Rent Roll Deep Dive – tips for extracting truth from seller financials

🎧 Connect with Jason:

✅ LinkedIn

✅ https://IroncladUnderwriting.com

✅Linktree

🎧 Connect with Frank:

✅LinkedIn