Understanding return on investment (ROI) is crucial for comparing opportunities on a platform.
Basic ROI
ROI = (Net Profit / Total Investment) × 100
Cash-on-cash return
Annual pre-tax cash flow divided by equity invested—useful for levered deals.
Cap rate
Net operating income divided by value—helps compare assets before financing.
IRR & multiples
For multi-year projects, internal rate of return and equity multiple capture timing of cash flows better than a single ROI figure.
Always reconcile marketing figures with the formal prospectus or information memorandum.
