Accredited Investor Insights

Accredited Investor Insights

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Accredited Investor Insights
Accredited Investor Insights
Return Metrics
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Return Metrics

IRR, EM, CoC and the rest of the alphabet

Leyla Kunimoto's avatar
Leyla Kunimoto
Mar 11, 2024
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Accredited Investor Insights
Accredited Investor Insights
Return Metrics
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Imagine this: you have 2 investment options. One is a stabilized core multifamily fund that generates 5% yield. The other option is a ground-up CRE development deal, that will generate no income until the property is leased up and sold in three years.

How do you compare the two?

Yes, we know they are on the opposite ranges of the risk scale. But in order to evaluate whether we are compensated sufficiently for the risk, we need to compare expected returns for each.

Today, we’re breaking down how common return metrics are calculated (and the limitations of each).

➡️ No single metric tells the whole story, so it’s important for investors to consider them together. You’ll also find a downloadable PDF guide at the end of this post.

We’ll cover this (and more):

  • Why hold duration matters when evaluating track records

  • How to properly calculate cash-on-cash

  • Why equity multiple needs to be taken into account

  • And which metric is the easiest to manipulate (yes, that one)

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