When investing in multifamily or other types of commercial real estate, a common calculation used to measure investment performance is the Equity Multiple. The Equity Multiple represents how much an Investor is projected to receive in total distributions over the life of the investment, based on his/her total capital invested. Equity Multiple = Total Distributions…
When reviewing a potential real estate investment opportunity, or the performance of an existing investment, one of the indicators that should be considered is Cash on Cash Return. The formula for Cash on Cash Return is the Cash Flow divided by the total Cash Investment. Cash Flow / Total Cash Investment = Cash on Cash…
A common metric used to evaluate investment performance in multifamily real estate and often compare various investment opportunities is the Internal Rate of Return (IRR). When reviewing investment opportunities from multifamily sponsors, IRR is one of the projected returns that should be shown. IRR is expressed as a single percentage, such as 15% or 17%,…