The other part of evaluating an investment is determining the return on investment it generates for the investor. Do this through the use of the cash multiple metric.
- All right, now let's look at a concept called…the cash multiple.…This is something that is frequently used…in combination with the internal rate of return.…And it's actually a very, very simple concept.…The idea is if you put in one dollar into an investment,…how much do you get back for every dollar that you put in?…So let's look at an example here…where two projects give a two x multiple,…okay, cash multiple.…Both investments double your money.…
So do they give you the same return?…Now, the two x means, you put a dollar in,…you get two dollars back.…So you get your original dollar,…plus you get a dollar of profit.…So that's how you get a two x multiple.…And basically, it means doubling your money.…So if it was a one x multiple,…it means you just got your original investment back, okay?…So now we have two projects…that both have a 2.0 cash multiple.…That means they both double your money.…So are the projects the same?…Well, if you remember from the internal rate of return…and our discounted cash flow analysis,…
Note: This course uses data and example properties from the United States, but the concepts taught and tools provided are just as useful for any market.
- Determining if real estate investment is right for you
- Choosing a market and a property
- Using financing
- Strategies for first-time investors
- Real estate market cycles
- Valuing a property
- Analyzing your market
- How leverage impacts investments
- Real estate investment case studies
Skill Level Intermediate
Managing Your Personal Investmentswith Jane Barratt1h 31m Intermediate
Learning Real Estate Photographywith Scott Hargis3h 21m Beginner
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
Start here3m 29s
1. Case Study: Joe's First Investment
2. The Many Ways to Invest in Real Estate
3. Real Estate Market Cycles
4. How to Value a Property
5. Understanding Your Market
6. What Makes a Good Investment?
7. Understanding Leverage
8. Case Study: Rental Income Property Analysis
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