How Do You Calculate Return On Investment For Real Estate
JB
Jeremiah Boucher Founder, Patriot Holdings • Author of Finding Your Edge
Key Takeaways
- IRR measures the time value of money — a 20% IRR over 3 years is better than 20% over 7 years.
- Cash-on-cash return measures annual cash flow relative to your equity invested — the simplest metric to track.
- Equity multiple tells you how much total money you get back — a 2x multiple means you doubled your investment.
- Don't chase one metric — evaluate deals on cash flow, appreciation potential, tax benefits, and risk together.