Two engines, one deal
A deal's return profile is built from three buckets, and every offering page reads the same way: which of these does the deal deliver, and how much of each. Cash flow and equity growth are the two return engines. Tax efficiency is not a third engine—it rides along, changing how much of the other two you keep.
A stabilized rental leans cash flow. A ground-up development leans equity growth. Many deals do both—but one engine always leads, and the lead engine is what the deal's headline number describes.
Equity growth
Appreciation you realize when the asset is sold or refinanced.
Cash flow
Income paid to you while you hold—distributions, interest, or yield.
Tax efficiency
How the structure shelters or defers tax on what you earn.
The income stats
Income stats answer one question: how much lands in your account while you hold, and when. Each stat below is a different angle on that question—they are not interchangeable.
Cash-on-cash
Annual pre-tax cash distributions divided by the cash you put in. A 7% cash-on-cash on $100k means about $7,000 a year while you hold.
Current yield
The income the deal is paying right now, as a percent of your investment—often shown on a deal card as cash yield. Close cousin of cash-on-cash; watch whether it's actual or projected.
Preferred return
The annual return investors must receive before the sponsor (the company running the deal) takes a share of profits. A hurdle and a priority—not a guarantee that money will be there.
Distribution cadence
How often checks go out—monthly, quarterly, annually. Same yield, very different feel.
First distribution
How long after closing the first check arrives. A development deal might not distribute for years; a stabilized one might start next quarter.
Cedar Court targets a 7% cash-on-cash, paid quarterly: your $100,000 earns about $7,000 a year—$1,750 a quarter—with the first check roughly 90 days after closing.
The growth stats
Growth stats answer a different question: when this deal is over, what did my money turn into? They only mean something once you also know how long the money was out.
Equity multiple
Total cash returned divided by cash invested, over the whole deal. 2.0x on $100k means $200k back—your capital plus $100k of profit. It ignores time completely.
Projected IRR
The annualized rate of return, accounting for exactly when each dollar goes out and comes back. Time-sensitive by design—early money back pushes IRR up.
Hold period
How long your capital is committed. The bridge between the multiple and the IRR: the same multiple over a shorter hold is a higher IRR.
Exit strategy
How the gain actually gets realized—a sale, a refinance (a new loan that returns cash to investors), occasionally an IPO. Until the exit happens, the growth is on paper.
Cedar Court's plan targets 1.8x over a five-year hold: your $100,000 comes back as $180,000 in total—capital plus $80,000 of profit, most of it arriving at the exit.
IRR vs. the multiple—time is the difference
A 2.0x multiple over eight years and a 1.6x multiple over three years look like A beats B—until you annualize. The eight-year deal earns roughly 12–13% a year; the three-year deal roughly 17%. The multiple tells you how many dollars; the IRR tells you how hard each dollar worked per year. You need both.
This is also why a very high IRR on a very short deal can be less impressive than it sounds: annualizing a quick win produces a big percentage on a small pile of dollars. When someone leads with IRR, ask about the multiple and the hold. When someone leads with the multiple, ask about the hold and the IRR.
Projected means projected
Every forward-looking number on an offering page—projected IRR, target yield, any figure labeled 'pro forma' (numbers from the sponsor's forward model)—is a modeled target, not a promise. Sponsors build those models from assumptions about rents, costs, exit prices, and timing; good due diligence—the homework you do before investing—is asking which assumptions matter most and what happens if they're wrong.
One phrasing rule follows from this, and it applies to everyone who talks about deals: returns are targeted, projected, or historical. They are never guaranteed—and anyone who says otherwise just handed you a red flag.
Two engines: cash flow pays you while you hold; equity growth pays you at the exit. Tax rides along, changing what you keep.
The multiple counts dollars and ignores time; IRR measures speed. Never quote one without knowing the other—and the hold.
Every forward number is a projection. Returns are targeted or historical—never guaranteed.
Reading it is half the job. Run the drills until the answers come without thinking.
Lost on a term? The glossary has every definition in one place.
Educational content only—not investment, legal, or tax advice. Every figure used in examples is hypothetical, including Cedar Court, which is a fictional deal.