Best way to measure performance over a long term hold
One of my friends recently inherited two decently sized properties from his dad when he passed away.
What do you think would be the best way to measure property returns over the long term, given they were acquired over a decade ago?
My initial thought is to just calculate the cash-on-cash return based on the total cost basis they've invested in the project (i.e. original purchase price, all capex, ti, lc, and anything else they've invested in the property). Does this sound right to you guys?
Past financials records are hit and miss depending on the year, but moving forward he plans to hire a professional PM so I hope that will help.
TIA!
There are a few mandatory metrics to be considered for any income generating property: Gross Yield, Cap Rates and IRR (levered if applies). CoC is also useful, but remember, It does not consider the time value of money.
Exercitationem iste voluptates vero. Id rerum repudiandae corporis aliquid ut ea.
Laudantium quaerat alias harum. Est optio atque voluptatem nemo corrupti unde dolores. Et voluptatem beatae expedita officia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...