What Does IRR (Internal Rate of Return) Mean?

The Internal Rate of Return, otherwise known as IRR, is a measure of performance that tracks returns earned by an investment over a period of time.  People often confuse IRR with average annual return, but those two are not the same. Let me explain. Let’s assume that you invest $100,000 into a syndication, and after […]

What Does Equity Multiple Mean in Real Estate?

When you’re thinking of investing in Real Estate deals, it’s important to look at things such as an Equity Multiple, as well as IRR, Cash on Cash, etc. to make an informed decision.   What is an Equity Multiple? Equity multiple is the total return of a deal, plus initial investment, divided by initial investment. […]

What is a Cap Rate in Real Estate?

Cap rate, short for capitalization rate, is an industry term that measures the Net Operating Income in proportion to the price of the asset. Let me give you an example of that to make this easier to understand: Let’s say you’re looking to invest in a property with the following metrics: Net Operating Income: $100,000 […]

What is Cash on Cash (CoC) in Real Estate?

Cash on Cash is the amount of money you receive from property cash flow as a percentage of your original investment. As an example, let’s say you invest $100,000 into a property and it’s projected to give you 5% in Cash on Cash returns over the holding period. That may mean that you would receive […]

What Are Preferred Returns in Real Estate Syndications?

If you start looking at Real Estate syndications to passively invest capital into, you’ll likely run across offerings that have “Preferred Returns”. What are preferred returns, you ask?   Preferred returns are shares that sit higher up in the capital stack when it comes to distributions, usually right behind the lender. Preferred returns usually get […]