Real Estate & REITs
A deal shows a 3% going-in cash-on-cash but a projected 18% levered IRR. How is that possible, and what should it make you scrutinize?
Model answer
The return is back-ended: IRR counts ALL cash flows including exit proceeds, so a deal can start with thin current yield and still post a high IRR if NOI grows sharply and the exit is large - classic…
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