The Equity Multiple Explained For Real Estate Investors [What You Need To Know]

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Күн бұрын

The Equity Multiple Explained For Real Estate Investors [What You Need To Know] //
The equity multiple is used in almost all commercial real estate investment materials, and similar to the IRR, this metric can be a really helpful tool, but it needs to be used correctly in order to be relevant.
And just like the IRR, two deals producing the same equity multiple values can have very different business plans and overall return profiles, but when used in conjunction with a few other key metrics, the equity multiple can help you paint a much clearer picture of the potential profitability of an acquisition or development.
So to give you some more clarity on this metric outside of the textbook definition, in this week's video, we’ll walk through what the equity multiple actually represents, the practical applications of this figure within commercial real estate, and some key things to look out for when relying on this metric to help tighten up your underwriting and value commercial deals.
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🕒 Timestamps 🕒
0:00 Introduction
1:01 The Equity Multiple Defined
1:32 Get Context
3:21 Benchmarking The IRR
7:06 Capital Contribution Treatment
9:49 How To Apply This To Real Estate Investment Analysis
#commercialrealestate #realestateinvesting
*Nothing in this video should be construed as tax, legal, accounting, valuation, or financial advice or recommendation. All information in this video is intended solely for educational purposes, and you are advised to consult with your own personal professional advisors regarding your personal investment decisions.
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Пікірлер: 24

@BreakIntoCRE Жыл бұрын

Any other CRE finance metrics you'd like to see covered in more detail in a future video on the channel?

@petermarzo9882 Жыл бұрын

Maybe ROI vs. ROE in real estate?

@davidroldan6007 Жыл бұрын

Hi Justin In 8:10 why you subtracted the $200k from the $1.5m in the numerator?

@BreakIntoCRE Жыл бұрын

@@davidroldan6007 apologies if this was confusing - this was showcasing the incorrect way to calculate this, including the $200K additional equity investment in the numerator of the calculation (rather than the denominator). This $200K amount should be added to the initial $1MM investment in the denominator, resulting in the 1.25x equity multiple shown.

@davidroldan6007 Жыл бұрын

One of my favorite metrics for long term wealth creation.

@BreakIntoCRE Жыл бұрын

Agreed!

@robertnozick2235 Жыл бұрын

Would love to see a video on the differences between GP's and LP's such as day to day work, skills required, compensation, deal flow and geographic regions etc

@BreakIntoCRE Жыл бұрын

Great feedback, Robert! Thanks!

@smacnee3278 2 ай бұрын

Amazing, thank you.

@marioarcari7649 Жыл бұрын

Great Content

@BreakIntoCRE Жыл бұрын

Thanks, Mario!

@petermarzo9882 Жыл бұрын

Awesome video

@BreakIntoCRE Жыл бұрын

Thanks for your continued support, Peter!

@codeinejesus4033 Жыл бұрын

Any thoughts on starting as a financial analyst to enter into a real estate analyst role? There aren't many analyst level roles available in my area.

@BreakIntoCRE Жыл бұрын

There are a lot of transferrable skills you can take from a general financial analyst role and apply to a real estate analyst position - not a bad place to start out if CRE options are limited in the short-term.

@simfinso858 Жыл бұрын

Hey Thanks for the video.This is Really helpful. Cash on cash multiple video is also required for me. If You could give me link that will be very helpful for me.

@BreakIntoCRE Жыл бұрын

Glad it was helpful! Cash-on-cash video is linked here: kzfaq.info/get/bejne/jdODd5Sfxp7ce2w.html&pp=ygUiYnJlYWsgaW50byBjcmUgY2FzaCBvbiBjYXNoIHJldHVybg%3D%3D

@davidpartington7847 Жыл бұрын

Can you guys help me get an analyst job in the RE sector with CFI certification and your courses? No university or college degrees. Lots of practical experience in my own small-scale deals.

@BreakIntoCRE Жыл бұрын

Hey David, it does tend to be an uphill battle to land an analyst job without a 4-year degree at the vast majority of CRE firms. Our courses can give you the skill set you'll need to land (and succeed in) these types of roles, but many firms won't even entertain resumes that don't include a 4-year degree of some kind, regardless of technical skill set. I've found that looking for jobs at smaller, more entrepreneurial firms that can look past this tends to be the best bet for people without university degrees, so that could be an avenue to explore. Happy to have you in our courses if you think they might be a fit!

@hajirabegum2546 Жыл бұрын

I am worrking in due diligence (cre) interested in cre financial analyst please let me know courses I have to complete or what are the skills required.

@user-wl8yc1uk9o 9 ай бұрын

Would these return metrics be calculated after the hold period or could they estimated before a purchase?

@JDG.RealEstate 5 ай бұрын

Equity Multiple takes into account the amount of money invested and the amount you receive back. It doesn’t take into account time. However, it is kind of implicit that you are taking into account all the contributions and cash flows from the moment of acquisition all the way through disposition.

@stevecartwright3076 Жыл бұрын

I went to the website to see how I could sign up, but I would’ve liked a contact option before I spent the money. There’s no way to contact this organization as the website has no contact option for potential customers. This is very unethical to say the least. and very out of the norm for most organizations soliciting services in real estate. I’m wary to say the least if I have no way of contacting a host before I spend $800 a year! I welcome their feedback but I don’t expect it.