The MOST Important Return Metric in Commercial Real Estate

The MOST Important Return Metric in Commercial Real Estate // Commercial real estate investors value their deals based on the investment returns those properties can generate, essentially back-solving to a purchase price that will produce their targeted returns based on the projected cash flows of the real estate investment.
And with that, most investors are usually focused most on either the IRR, the equity multiple, the cash-on-cash return, or a mixture of all three of these metrics, each of which tell an important story about the deal being analyzed, and the timing (and amounts) of the property’s cash flow distributed over time.
And since the IRR, equity multiple, and cash-on-cash can each tell a completely different story about a deal, the logical next questions become, “Which metric should I be focusing on, and which metric is most important to me?”
In this video, we’ll try to tackle this question by breaking down some of the most common scenarios when focusing on each of these return metrics makes the most sense, and which metric is right for you to focus your attention on as you head into your next deal.
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[@BreakIntoCRE]

Which metric(s) do you use to value commercial real estate deals?

[@jacobkardanimoghaddam1852]

Depends on the client and their investment thesis. Some prefer the GL IRR, but others are focused strictly on CxC.

[@noahrodriguez7601]

for the lending side, its all about dscr and collateral cash flow and for certain deals capex

[@manuelpenab]

Great video! I use IRR to compare investments

[@petermarzo9882]

Great stuff Justin. Just learned about this yesterday in your course. Highly recommend anyone to sign up for it. It will propel you years ahead.

[@BreakIntoCRE]

Thanks, Peter! Great to hear you're finding the class helpful!

[@anniewilsonblair9873]

Excellent information

[@wockybruh4615]

This guy is good

[@anniewilsonblair9873]

Excelente información

[@alexshafir1]

Justin, great information. Do you have this infotmation in printed form with real life examples to study?

[@sarimzahid3481]

Excellent video

[@BreakIntoCRE]

Glad you found it helpful, Sarim!

[@paul1056]

Great info, I need your coaching.

[@DMilla0098]

Hi! I've downloaded your crash course. The values are in square feet, can it still be used for square meters?
Thank you! Great Stuff!

[@neil_sol]

I just graduated from uc irvine majoring in business administration/finance and I want to get a job as a real estate investment analyst or something similar to break into the field but there were only like two real estate courses offered to undergrads do you think I should get a course like yours to learn RE financial modeling? Also for these entry level jobs what type of training do they provide if any or do they expect you to know how to do everything already

[@raynoohi7979]

Hi Justin Great stuff, I am a land owner wanting to do a land lease with a high rise appartement builder. do you have any formula that I can use

[@LoganXHebda]

Justin basically determining what a particular investor type’s love language is

[@TheRstraxx]

Hi Justin, I’m Seriously considering a career change. I’ve been in sales from the day I left school but feel like I’ve done all I can in the industries I’ve worked in and need a new challenge. Is 34 too old to start a new career as a commercial agent?
I’m a natural hunter. Do new agents still do a lot of cold calling as their main form of prospecting? Curious to know, as I have a direct sales company and wondering if I could transition my staff into real estate in some way or another.
Cheers

[@09kevinstratton]

Hey Justin. I'm on the development side of single family residential development but would like to get more involved in the financial aspects of the business. We are the developer so there is no reason to hire a GC for each project. We currently just offer a preferred return to investors once the project is finished and sold. I would love to be able to model a complete development project for future investors. If we are selling the projects once completed, how would this differ from your course on Real Estate Development Modeling?

[@bommaritohawaii]

Did you end up taking his course?

[@ahmedhamed1092]

Florida real estate IRR can be well over 40% if you purchased 3-4 years ago.

[@crackerjackB]

Examples

[@Bratwhotravels]

Can you tell about leverred and unlevered irr

[@Rogershijianhui]

Hi Justin, my boss wants me to value hotel. Could you recommend some classes on hotel valuation. Thanks 😊

[@BreakIntoCRE]

Hey Jianhui, unfortunately we don't have any courses at the moment on hotel valuation, and I'm not sure of another reliable resource to point you towards. Sorry about that!

[@strattonbusinessbrokersllc]

Jianhui, hotels usually trade between 8-11x EBITDA or 8-9x EBIT. Of course, many other variables can effect that valuation such as intellectual property.
Good luck!

[@BreakIntoCRE]

@@strattonbusinessbrokersllc you rock! Thanks for chiming in!

[@Rogershijianhui]

@@strattonbusinessbrokersllc Thank you! I really appreciate it

[@LouBloom21655]

Besides your courses would firms require a bachelors?

[@BreakIntoCRE]

Hey Luis, most CRE firms do require at least a Bachelor's degree for analyst/associate positions.

[@TheBrosaaShow]

0:30 got interesting fast