Payback period

Payback period — how many years of cumulative net cash flow it takes to get your invested cash back. Crude by design: it ignores appreciation, equity buildup, and everything after the payback point, which is exactly why it’s hard to fool. A rental with a 25-year payback being sold as an “income asset” is having its story corrected by one division. Used across the course — semi-passive businesses in Level 4 live and die by it.

First used in: 3.4 · Underwriting: the Gallinelli math