What are decent returns on development?
Hi guys, I would be glad if you could all post in whatever area you're familiar with what you or your group thinks are decent returns for real estate development. Maybe list a) type of development, b) return and what type of return it is (irr, unlevered/levered, cash on cash (maybe also add time period?) etc.) c) riskiness of development (i.e. greenfield vs. prime downtown). also optional d) where geographically you're referring to and anything else you'd want to add.

Thanks, would be interesting to find out!
[{"id": "daay2kr", "text": "I'll start with an easy one. Multifamily development, major city in Canada, developer looks for 15% profit on their final sales price over 2-3 year period (srry not on excel to calc an irr equivalent of that), usually on lower risk proven areas.", "replies": [], "depth": 1}, {"id": "daazofd", "text": "When I proforma developer profit into a redevelopment scenario it's usually 15-20% premium over total project cost.  IRR, cash on cash, etc. will vary based on how much cash he has to put into the deal.", "replies": [{"id": "dab00tv", "text": "Cool thnx for input. Would the project timeline be a big factor? I can imagine that 15-20% getting stretched out over 5 years to become rather thin.", "replies": [{"id": "dab5gth", "text": "15-20 is standard.  If the timeline doesn't make sense then the deal won't happen.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dab9wyj", "text": "We model to a 7% unlevered yield (Stabilized NOI over total Project Cost).\n\nFrom there we aim for a 20% IRR on a 10 year hold.", "replies": [{"id": "daba2dm", "text": "Yah 7% yield would be considered hella strong or impossible where I'm from. 20% IRR on a 10 year? Holy smokes batman, levered or unlevered? That's high bro.\n\nedit: Sorry 7% yield as in NOI/Cost I glossed over that part. Yah that's doable. We get less leverage in Canada though our financing market's not as deep or wide as in the states.", "replies": [{"id": "dabar4j", "text": "Levered of course. 20% is what we aim for, most of our deals model out to 18%. Our typical capital stacks include 10% developer equity, 30% pref equity, and 60% financing.", "replies": [{"id": "db6i36c", "text": "What type of return do you offer on the preferred equity?", "replies": [{"id": "db6kpaw", "text": "Usually around 10-12%", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "dabgsnx", "text": "Second this. I invest in RE Private Equity funds. Typically I see around 20% IRR and 2.0 equity multiple for successful development deals, net of fees.", "replies": [{"id": "dadxz42", "text": "Hey, would you mind elaborating on what kind of geographic areas you invest it?", "replies": [{"id": "dae6x39", "text": "All secondary markets. We Like jurisdictions where development is restricted by what is called a Certificate of Need. ", "replies": [{"id": "dae92bo", "text": "Would you change your return target for primary markets?", "replies": [{"id": "daecl7c", "text": "I would expect them to be lower. But I'm not sure I'd do to many now. Costs are much higher and with the ACA uncertainty high rents are a problem. ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]