Stress Testing in Underwriting: Preparing for the Unknown

Overview

In this episode of the Ironclad Underwriting Podcast, Jason Williams and Frank Patalano dig deep into the concept of stress testing in commercial real estate underwriting. They explore why sensitivity analyses are critical, how assumptions around interest rates, exit cap rates, hold periods, and expense ratios can make or break a deal, and the importance of preparing investors with realistic projections. Through real-world examples, they highlight lessons learned, common pitfalls, and practical ways to build more resilient underwriting models.

Topics Covered

• Why stress testing and sensitivity analyses are essential for conservative underwriting

• The impact of interest rate volatility and cap rate assumptions on deal performance

• How to stress test hold periods, rent grow ...