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10% is hardly a rate of return to brag amount, especially since dense housing requires large amounts of capital tied up for multiple years. Assume a complex tak
by krapht 11y ago
10% is hardly a rate of return to brag amount, especially since dense housing requires large amounts of capital tied up for multiple years. Assume a complex takes 18 months to build. Then that 10% is even less.
- refurb 11y agoI noticed that too. Also, they didn't do a side-by-side comparison of building affordable units and not. How much does the profit change? It's important to remember that just because you turn a profit on an investment, doesn't mean you should make it. You need to look at what else you could invest in. If constructing a building in SF with affordable units turns a profit of 10%, but constructing the same thing without affordable units in, I don't know, Houston, gives you 20%, where do you think the investments will flow?
- brudgers 11y agoA 10% projected internal rate of return is unlikely to attract the capital necessary to develop multifamily housing. The lower the projected returns, the higher the risk. Unlike VC, a project that goes south has a massive impact on a portfolio. There are not 1000:1 real estate projects to make up for losers.
- SilasX 11y agoAnd then factor in the costs of the approval process and probability of being denied ...