Calculating Total Returns

Total return is everything you got back, minus everything you put in, divided by what you put in. Total return = (distributions received + sale proceeds - amount invested) ÷ amount invested Say you invest $1,000. Over five years you receive $60 a year in distributions, $300 in total. At the end the property sells and your share of the proceeds is $1,200. Total return is ($300 + $1,200 - $1,000) ÷ $1,000 = 50%. That 50% has two parts you should keep separate: • Income return: $300 ÷ $1,000 = 30% over the period • Appreciation return: ($1,200 - $1,000) ÷ $1,000 = 20% over the period Separating them tells you what kind of investment it was. A property that returned 50% mostly through rent is a different animal from one that returned 50% mostly through a sale, even though the headline is the same. Use the money you actually paid as the denominator, including any purchase fee. If a platform charged 2% on the way in, you paid $1,020 for $1,000 of shares, and the return should be measured against $1,020.

A 50% return over five years and a 50% return over ten years are very different results. To compare them you need a per-year figure. Simple Annual Return: Divide the total by the number of years. 50% over five years is 10% a year. This is easy and slightly misleading, because it ignores compounding. Compound Annual Return: The rate that, compounded each year, gets you from the start value to the end value. For 50% over five years that is about 8.4% a year, not 10%. The longer the period, the bigger the gap between the simple and compound figures. IRR: Internal rate of return goes one step further and accounts for when each dollar arrived. Money received in year one is worth more than money received in year five because you could have reinvested it. In the example above, the $60 distributions arrive early and the $1,200 arrives at the end, so the IRR works out to roughly 9.3%. A property that paid nothing for five years and then returned the full $1,500 would have the same total return and a lower IRR. Platforms often quote IRR for growth listings because it flatters early cash flow, and cash yield for income listings because it is easy to grasp. When you compare two listings, put both on the same footing. A spreadsheet's IRR function will do the math for you if you list the dates and amounts. The habit to build is asking 'over what period, and when does the money arrive' whenever you see a return figure.

Fees are the difference between the property's return and yours, and they show up in at least four places. Sourcing or Acquisition Fee: Charged once when the property is bought, typically 1% to 5% of the price, and taken out of the money investors put in. It reduces your starting equity before anything happens. Asset Management Fee: Charged every year, usually 0.5% to 1.5% of the property value or of the money raised. On a $500,000 property that is $2,500 to $7,500 a year off the top of rent. Over a five-year hold it compounds into a noticeable slice of the total. Property Management Fee: Paid to the company operating the property, often 8% to 10% of rent. This one exists for a traditional landlord too, but it is still money that never reaches you. Disposition Fee: Charged when the property sells, often 1% to 3% of the sale price, taken before proceeds are distributed. Some platforms also take a share of profits above a threshold, called a promote or carried interest, which can be 10% to 20% of the gain. On tokenized platforms, add transaction fees on the blockchain and any spread when you convert stablecoins back to currency. None of these are hidden if you read the offering documents, but few listings put them on the front page. Two properties with identical rent and identical appreciation can deliver returns several percentage points apart because of fees alone. Each platform's profile on Threeworld summarizes its fee structure so you can compare before reading the fine print.

Here is a complete five-year hold on a $400,000 single-family rental, with you putting in $1,000. Purchase: The platform raises $420,000 from investors, of which $20,000 covers the 5% acquisition fee and closing costs. Your $1,000 buys 0.238% of the property. There is no mortgage. Years one to five: Gross rent is $30,000 a year. After 5% vacancy, $8,000 in taxes and insurance, 9% property management, 7% maintenance reserve and a 1% asset management fee, about $14,000 a year is distributed. Rent grows 3% a year, so distributions rise to about $16,000 by year five. Your share totals roughly $180 over the five years, an average cash yield of 3.6% on your $1,000. Sale: The property sells for $470,000, a gain of 3.3% a year. A 2% disposition fee takes $9,400. The remaining $460,600 is distributed, and your 0.238% share is about $1,096. Total: You received $180 in distributions and $1,096 at sale, $1,276 in all, on $1,000 invested. Total return is 27.6%, roughly 5% a year compounded. The IRR is a little higher, close to 5.4%, because the distributions arrived along the way. Notice how the numbers moved. The property earned a 7.5% gross yield and appreciated 17.5%, and you received 5% a year. Every step in between was a real cost, and none of them were unusual. Run any listing through the same steps before you believe its projection.

The hardest part of comparing returns is that every platform reports differently. One quotes gross yield, another net cash yield, a third a targeted IRR over a hold period it chose. The properties may be in different currencies with different tax treatment. Threeworld's marketplace converts every listing's stated figures into the same units so you can sort and filter across platforms, and the Threeworld Score adds a second lens. Its four pillars, income, funding momentum, value and access, and data transparency, rate each listing against its peers, and the transparency pillar specifically rewards platforms that publish the detail you need to check their numbers. Sort the marketplace by score to see which listings stand up to that scrutiny. The analytics dashboard shows the average yield across the whole market and by platform, which is a useful sanity check. A listing projecting twice the market average deserves a closer read of how that projection was built. A few rules for fair comparison: • Compare net to net. If one figure is before fees, subtract them before lining it up against one that is after. • Compare the same period. Convert everything to a compound annual figure. • Note the leverage. A higher return on a heavily indebted property is not the same quality of return. • Note the certainty. A yield from a rented property is an observation. A targeted IRR on a development is a forecast. Next step: learn how to evaluate a property so you can check the inputs behind any projection yourself.