My spreadsheet says the crowdfunding deal I almost wired $15,000 into last October would have returned 1.1x after four years

Your exit cap work was the right lever to pull; a 110bps spread between sponsor assumption and market comp consumes most of the preferred return before anything else goes wrong.

What you did is exactly how underwriting is supposed to work. You found an assumption that looked unsupported, tested it with market data, rebuilt the model, and decided the risk-adjusted return did not justify the capital and the four-year lockup. That is the sequence.

A few things worth naming for anyone reading this thread who is earlier in the process.

The exit cap rate is the capitalization rate a buyer would apply to the property's income when the sponsor sells at the end of the hold. A higher cap rate means a lower sale price for the same income. Your sponsor modeled 6.1%. The market data you found suggested 7.2 to 7.5. That gap is enormous in the math. On a project of that size, moving from 6.1% to 7.2% can cut millions off the exit value, which is exactly what your waterfall rebuild showed.

The 1.08x multiple under stress is the part I would highlight for anyone just learning to read these deals. That means for every $1,000 invested, you get back roughly $1,080 after four years, before fees, before any extension to the hold period. A 48-month lockup for that outcome in a secondary market with adaptive reuse complexity is a real conversation to have with yourself.

On the deal's current status: I genuinely do not know, and I would not speculate. No distribution history at 18 months on a preferred equity position is worth noting, but adaptive reuse timelines and lease-up schedules vary. If someone is in a deal like this and has questions about their position, a conversation with the sponsor directly is the right move.

One thing worth confirming with whoever you use as a tax professional: how preferred equity returns are classified at distribution matters for how you compare net returns across structures.

What did your vacancy stress testing use as the breakeven point, the vacancy rate at which the preferred return stopped clearing entirely?