How to Read an Investment Deck: What to Look for Beyond the IRR

Why IRR Isn’t the Whole Story

For many new investors, the Internal Rate of Return is the headline number that dictates whether they say yes or no to a deal. But IRR can be deceptive. It measures projected returns over time, but those projections are only as good as the assumptions behind them. A great-looking IRR in a deck with weak fundamentals is like a sports car with no engine.

At Infinity⁹, we’ve reviewed hundreds of deals that offered double-digit IRRs but failed to deliver. Why? Because the focus stayed on the number, not the framework that made it possible.

Key takeaway: IRR is just the cover of the book. The real value lies in reading every chapter.

1. Understanding the Sponsor’s Track Record

Before looking at the deal, look at the people. A sponsor with a proven history of executing similar strategies is worth more than a spreadsheet full of optimistic projections.

Questions to ask yourself:

• Have they succeeded in both good and bad markets?
• Can they show full-cycle deals, not just acquisitions?
• Do they have skin in the game financially?

Remember Infinity⁹’s perspective: There are no bad markets, just bad strategies. Sponsors who thrive across cycles usually have strategies built to adapt.

2. Market Positioning and Timing

Many decks present glowing statistics about the market, but timing matters just as much as location. An asset purchased at the peak of a cycle may struggle even in a growing region.

Look for:

• Demographic trends that support long-term demand
• Supply constraints that protect value
• Economic drivers beyond a single industry

Your money doesn’t need a visa, but it does need to be in a market where capital can grow despite short-term fluctuations.

3. Downside Protection and Risk Management

Smart investors think in two layers: potential upside and built-in downside protection.

Signs of strong downside protection include:

• Conservative leverage (debt) ratios
• Interest rate hedges or fixed-rate debt
• Realistic expense and vacancy assumptions
• Multiple exit strategies

If the IRR assumes flawless execution with no margin for error, that’s a red flag. A well-structured deal bakes in safety nets without sacrificing opportunity.

4. The Strategy’s Real-World Resilience

A deck can make any plan sound perfect. But how does it hold up against reality?

You want to see:

• Stress test scenarios
• Historical comparisons to similar deals
• Contingency plans if revenue dips or costs rise

Infinity⁹ calls this the Building Capital Framework: designing investments that perform under pressure, not just on paper.

5. Alignment of Interests

A good deck will tell you exactly how the sponsor gets paid — and when. If fees are front-loaded, they profit regardless of your returns.

Ideally, the sponsor earns most of their upside after you’ve earned yours. That alignment builds trust and keeps the strategy investor-first.

6. Transparency of Assumptions

Every IRR is built on assumptions about rent growth, occupancy, cap rates, and expenses. If the deck doesn’t clearly show how those assumptions were reached, be cautious.

Transparency signals confidence. A sponsor willing to walk you through their math is far more likely to stand by it when the market shifts.

Putting It All Together

When you read an investment deck, think like an investigator, not just a shopper. The IRR is your first clue, not your verdict.

An example from our experience: we reviewed two multifamily deals in the same city. Deal A promised an 18% IRR with aggressive rent growth assumptions and maximum leverage. Deal B projected a 13% IRR but with conservative rents, fixed debt, and a sponsor with a flawless 15-year record. Two years later, Deal A was underwater. Deal B exceeded its projections.

In private investing, protecting your downside is often the fastest way to secure your upside.

Why Private Investments Excel Here

Public market investments like REITs and mutual funds rarely allow you to dig this deep. You see a ticker price, not the strategy. Private investments give you direct insight into the deal’s foundation, making it possible to make decisions with more precision.

That’s why Infinity⁹ emphasizes access to institutional-quality real estate opportunities where investors can assess more than just a headline return.

Final Thought: The next time a deck crosses your desk, treat the IRR as a starting point. The real intelligence lies in the story behind the number.

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