In practice, is it generally more common to calculate your cash flows to equity and investment metrics (IRR, cash-on-cash, EM, etc.) on a pre-tax or post-tax basis? Or both?
In some of my classes, we're taught to do everything on a post-tax basis (mostly the "academic" professors), and in other classes, we don't take into account income or capital gains taxes (mostly the "industry" professors).
When I interned at a multifamily development shop, everything was done pre-tax.
My hunch is that post-tax analysis is used more so for personal investments in CRE, and for accounting/tax purposes; pre-tax analysis is used for your typical acquisitions/investment committee/BOE.
Basically, if you're modeling a deal for "someone else"--a group of people generally--you model it on a pre-tax basis since everyone has their own tax rates and tax consequences. If you're modeling a deal for "yourself"--you personally or the company that employs you--then you model it post-tax. Generally. There are exceptions, of course--my boss likes to look at deals pre-tax because it gives him a better idea of the merits of the deal.
^ Great answer
In practice, return metrics are modeled pre-tax. The reason being is that everyone's personal tax structure is unique. If you are dealing with a fund of pooled investors, having an educated post-tax analysis tailored to each investor would literally take months.
Take it one step further a lot of investors like to start with the unlevered pre tax return.
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