3. Stabilized cap rate (yield):
Since we focus on value add, the entry cap doesn’t matter at all, as long as we can service our debt
We typically need to get to a 6.5%+ stabilized for a deal to pencil. How quickly we get there plays a role as well (quicker the better for IRR)
Since we focus on value add, the entry cap doesn’t matter at all, as long as we can service our debt
We typically need to get to a 6.5%+ stabilized for a deal to pencil. How quickly we get there plays a role as well (quicker the better for IRR)
4. Unlevered vs levered returns:
This is basically just a gut check to make sure that our leverage isn’t out of control
5. Equity Multiple:
We only check this to make sure that they’ll be enough promote for the deal to be worth our time (no point in 20% IRR and 1.2x EM)
This is basically just a gut check to make sure that our leverage isn’t out of control
5. Equity Multiple:
We only check this to make sure that they’ll be enough promote for the deal to be worth our time (no point in 20% IRR and 1.2x EM)
6. Cash-on-cash:
We essentially ignore this metric and expect cashflow to be very low during the hold period (unless we’re working with a specific LP who needs cashflow). Often even have to make (planned) capital calls and have earn-outs built into debt covenants to inject
We essentially ignore this metric and expect cashflow to be very low during the hold period (unless we’re working with a specific LP who needs cashflow). Often even have to make (planned) capital calls and have earn-outs built into debt covenants to inject
More capital for a value-add aspect of a deal (ex. Tenant buildout)
Since this isn’t really a metric, I didn’t include it, but the most important part of our analysis is whether the deal is actually viable on a risk-adjusted basis and whether the property is actually good real estate
Investing in only *great* RE has allowed us to outperform
Investing in only *great* RE has allowed us to outperform
