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Updated almost 7 years ago,

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1
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Ronald Sampson
  • Sacramento, CA
0
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30% Cash on Cash on New Construction Enough?

Ronald Sampson
  • Sacramento, CA
Posted

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.

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