What Are GOOD Returns for New Development?

Key Takeaways:

For new development projects, investors typically want to see a 20% or higher Internal Rate of Return (IRR).

An 8% return is considered too low for development projects, which are inherently risky.

Equity multiple is often a preferred return metric, with investors looking for around 2x equity multiple in less than five years.

When vetting contractors, it's crucial to:

Talk to other developers they've worked with

Inspect their job sites

Check their professionalism and documentation

Seller financing depends on:

Talk to other developers they've worked with

Inspect their job sites

Check their professionalism and documentation

Seller financing depends on:

Talk to other developers they've worked with

Inspect their job sites

Check their professionalism and documentation

Down payment amount

Borrower's track record

Property type and potential risk

Marketing and finding tenants requires active prospecting, not just putting up a sign and waiting.

For commercial real estate investing, having a track record is crucial - even a small first deal can open doors for future opportunities.

Returns and deal attractiveness vary by market, location, and specific project details.