You’ll probably come across the word “equity multiple” when researching commercial real estate syndication investing alternatives. It’s a term you won’t come across when buying a personal residence or even when investing in rental properties. While real estate investing is a great method to diversify your portfolio, reduce risk, and provide consistent profits, investors must know how to evaluate similar investments effectively to get the most out of it. Commercial real estate, unlike equities and funds, is a private opportunity asset that may not always provide the same level of insight into qualitative aspects.
Two of the most effective methods to assess the predicted total profits of a commercial real estate syndication investment opportunity against the dollar invested are the equity multiple and the Internal Rate of Return. We’ll go over exactly what an equity multiple is, how to calculate one, and what it implies for you as a passive investor in the blog post below. Commercial real estate syndications, unlike other ventures, involve more technical vocabulary, a long list of (sometimes confusing) KPIs, and a completely separate cash flow approach. We’re in the trenches with you, and we can’t let you miss out on financial independence because you don’t grasp how equity multiples operate!