Question about project wide returns...
Sorry if this is an odd and completely novice question, but just trying to get a better understanding...

When a commercial real estate development (retail, multifamily, etc) is being done, what is the general range of PROJECT WIDE (including financing) return multiple? I know this can be a huge range, but just in general. As in, if a project is your $2m in equity and $8m in financing (10m total cost), is a $20m (or 2x) return when all is said and done a high or a low multiple?

Secondly, if it is for example, a 2x ($20m) and all the equity was put in by one person, would that one person receive the full amount of $20m minus the debt and interest?

[{"id": "cogqkmz", "text": "The simplest way to think about this is that MOST equity investors want a multiplier of 2 within 5 years. Given that the first 18 months of a MFH deal has no income, this is a challenge.  Most developers that raise equity don't get any distributions on their project. Of course this is dependent on the capital stack.  Developers make their money on the takeout when it's sold. The development fee gets them by until the next project. Each deal is different. Now if you look at land, which is riskier, investors want a multiplier of 3. Bottom line, equity financing is expensive. ", "replies": [{"id": "coh116g", "text": "I guess what I'm asking is more about the multiplier on the project level, as in if you do a 10m project with 8m leveraged, and exit the project for 20m, creating a 2x project level multiplier... is that low, high, or pretty average of a project level multiple?", "replies": [{"id": "conbgrk", "text": "I would say that a 2x multiplier is normal for a 5 year hold.  But that is strictly applied to equity only.  The bank already gets a \"return\" from your debt payments.  If you take a project from a $10m to a $20m value with $2m in equity its more like a 10x return.  Read up on equity partner waterfalls.  Essentially the equity gets a preferred return based on different \"hurdles\" so that after x years the investor gets a x multiplier.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]