is irr of 5.90% good for property?

Question

i am calculating irr for 10 year period and after tax is 5.90% nd cap rate is 3.62% would you consider this too low?

Nick Peters · Answer

If you calculated your IRR the right way, then no, a 5% IRR when investing in real estate is not a good deal. At a minimum, you should look for 10% (and really nothing below). 10% is even pretty low when you consider all the work that you have to put into such an investment.

Jeff Bridges · Answer

Are you selling us your numbers or wanting feedback on them to form your own opinion? I see a really high HOA fee pulling out 5000 a year from your cashflow, plus somewhat high prop taxes, combined, likely are killing your cashflow and making it not worthwhile. You need to find HOAs with lower fees and see if the cashflow/ IRR improves in your calculations. Keep looking! The DC reference was about high prices and cashflow still getting a 20% plus IRR. Prices are lower in Houston so you missed the reference to more challenging market than yours to keep a high IRR...

Karl McGarvey · Answer

@Ivy Markov there is def better than that in Houston/Galveston. We close on a property next week where we estimate 17-25% in the first few years

Ivy Markov · Answer

also opportunity is in houston and margins here in today’s market are very slim so it’s not metropolitan area like dc

Russell Brazil · Answer

You sure you are calculating it right? I average an IRR of 23% in the DC area.

is irr of 5.90% good for property?

is irr of 5.90% good for property?

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