Good ROI on MF Equity
What is the "norm" ROI for equity plays in CRE?  I am looking at a few with 6-7% annually plus a split if anything is higher than that, plus a split on the exit of 70/30 - 65/35, others are similar annual with an exit of 20 IRR on a retail/office asset.  Are these normal or should I shop more?
[{"id": "dnuxi0r", "text": "Depends on the market that you are in. 6%-7% isn't terrible, but isn't great. Unless you are going the value-add direction on a property, be focused on making your bacon on the exit.\n\nYou can really build that equity up as a 1099 exchange buyer.", "replies": [{"id": "dnuygah", "text": "I want to buy my own deals but don't have enough capital ($350k) for my market of San Diego, so I was thinking of rolling it with a capital company for 4 - 5 years (2 deals ideally), growing it and then getting out there for myself.  ", "replies": [{"id": "dnv2aw8", "text": "I strongly recommend looking at industrial product. Cost of entry is low and the value of industrial space has increased rapidly. \n\nA lot of institutional investors are beginning to heavily invest in industrial CRE, especially the smaller flex, multi-tenant stuff.", "replies": [{"id": "doh4sb3", "text": "What sort of industrial property types do you recommend? ", "replies": [{"id": "dohnawj", "text": "Small multi-tenant projects. You want your suites to be 2,000-20,000 sf. It is easy to find plumbers, HVAC companies, and small contractors to fill blocks of space in that size range.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dnv0okk", "text": "Very location specific.  On acquisitions generally we offer our equity investors an 8-9% average cash-on-cash and a mid-teens IRR on a 5-year hold.  Splits are generally 80/20 to a 12-13% IRR hurdle and 70/30 afterwards.  We work mostly in the south, so NW or NE markets are probably lower annual returns, maybe higher IRRs.  \n\nIf you are looking at development then our stabilized cash-on-cash would be 10+% and IRR would be in the low to mid-20's.    \n\nNo matter where you are investing I would look very closely at exit assumptions, though.  I personally think the cap rates and pricing in MF right now is unsustainable.  I put much higher weight on cash-on-cash than I do IRR.  Nobody can predict pricing 5-years from now (no matter what they say), but if you are getting a 10% coupon every year it won't really matter if you can't exit right away.  \n", "replies": [{"id": "dnv2e0f", "text": "cap rates are unsustainable across most product types right now.", "replies": [], "depth": 2}], "depth": 1}]