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IRR and Equity Multiple: Cons in Common, and How to Not Use Real Estate Investment Metrics
One seeming benefit of any real estate investment metrics that sums up the potential returns of an investment opportunity is that it pretends to allow investors to compare potential returns across different investment opportunities using a standard measure. One massive drawback is that one metric only tells part of the [more]
Know the Differences: IRR vs. Equity Multiple for Real Estate Investment Evaluation
Internal Rate of Return (IRR) and equity multiple are both metrics that real estate investors use to evaluate investment opportunities. Recently someone told me that they do not look at the IRR as a method for assessing their investment opportunities but instead use equity multiple. While there are some similarities [more]
Equity Multiple to Evaluate a Real Estate Investment Opportunity
There are numerous metrics used to evaluate the quality and attractiveness of a real estate investment opportunity - equity multiple, IRR, cash-on-cash, cap rate among others. Each one tells a different part of the story, and no one metric offers a comprehensive picture. In addition, the investor's goals also play [more]
When Comparing Real Estate Investments: 3 Pros and 3 Cons of IRR
Real estate sponsors will often present Internal Rate of Return (IRR) as the main metric to consider when evaluating an investment opportunity. It is important to be aware of the drawbacks and benefits of all the various metrics used to present a real estate investment opportunity including cap rate, equity [more]
Is Target IRR better or Worse than Single Point IRR for Real Estate Investments?
Along with other metrics such as the capitalization rate (cap rate) and equity multiple, the target internal rate of return (target IRR) is a widely used measure in the real estate industry for evaluating the potential profitability of an investment property. Unlike the regular IRR, a target IRR is typically [more]
3 Pros and 3 Cons of Cap Rate: A Guide to Evaluating Real Estate Investment Opportunities
When it comes to analyzing real estate investment opportunities, the cap rate is a valuable tool. It represents the expected rate of return on an investment property based on its income-generating potential, and can be used to compare the relative attractiveness of different properties. Here are three benefits of using [more]
Bias and Time Constraints in Legal Recommendations: What Clients Need to Know
In their legal recommendations it is not uncommon for real estate syndication attorneys, amongst others, to suggest only one course of action, even if there may be other legal avenues that could be more appropriate for a given situation. There are several reasons why this may occur. One reason is [more]
3 Reasons Why a Reg CF is Better for Real Estate Projects than 506(b)
When it comes to raising capital for real estate projects you are selling securities, so it's important to be prepared by considering all available regulatory and legal options. One alternative to the more traditional 506(b) exemption that many real estate sponsors use is the Regulation Crowdfunding (Reg CF) exemption through [more]
3 Reasons Real Estate May Offer a Safe Haven During a Downturn
As we near the end of 2022 and look ahead to 2023, many experts are predicting that a downturn and a recession may be on the horizon. While a recession can be a challenging time for businesses and individuals, with job losses and reduced spending power, it can also present [more]
A Brief Overview of Exemptions for Real Estate Fundraising
Raising capital for a real estate project can be a complex process, and there are several options available to companies seeking to do so. Three commonly used exemptions for real estate capital raises are the 506b exemption, the 506c exemption, and the Regulation Crowdfunding (Reg CF) exemption. The 506b exemption, [more]
