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Updated almost 7 years ago,
30% Cash on Cash on New Construction Enough?
Hoping to get some opinions on a deal I'm looking at.
I have some land under contract to build a large commercial facility. I have 3 tenants, large corporations, with verbal contracts for 5 years. Obviously I will get hard written contracts before finalizing anything.
I'm calculating my Cash on Cash return at about 30%. The total price of land and all construction will run about $10M. Is this too risky with only a 5 year contract with these companies for 30% CoC? I'm not concerned about the companies being able to pay as they are very large and profitable. But I'm wondering if I should be shooting for something higher than 30% on new construction with only 5 years of Guaranteed tenants/returns.