Ditching IRR for Better Metrics
Manage episode 447825697 series 3609087
Evaluating real estate deals using the Internal Rate of Return (IRR) can be misleading, as it's an easily manipulated metric that doesn't accurately reflect the quality of an investment. Instead, the episode advocates for using unlevered yield on cost as a more reliable measure. This metric assesses how much yield a property generates without the influence of leverage, providing a clearer picture of whether a good piece of real estate was purchased at a fair price. The host highlights the importance of understanding the implications of leverage and how it can affect investment returns. Listeners are encouraged to scrutinize this metric to make informed decisions in their real estate investments.
Links referenced in this episode:
Companies mentioned in this episode:
- Scholastic Capital
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