Target IRR for Multi-Family

[Mark Neiger]

From what I've gathered from the experienced investors here I should be evaluating properties based on the IRR. I know how to calculate it but I don't know what is considered a good, mediocre or poor return. Could some of you give me some help with this?

[Michael Le]

Right now I'm still shooting for 20% IRR but frankly I think that number might be in flux. With the rise in interest rates and likely eventual rise in cap rates, there will be some temporary disconnect between what sellers are still expecting to get and what buyers are willing to pay. Right now the sellers are still winning but transactions numbers for January and February are already down from last year so you're beginning to see some buyers drop out. Not sure where we'll end up long term.