Is 8-12% a Good Return?

[Jonathan S.]

Hello Everyone, I am trying to understand what causes certain return targets to be placed by investors. For context, I am working on a passive investing platform with no cash-flow and emphasis on equity growth. While I know that return goals are different for each investor and their specific goals, it seems that a bad or low-performing deal for one person might be what another investor is looking for. 

Currently, my structure projects 8-12% IRR which stems solely from appreciation-based gains and has risks that differ from traditional REI or syndications. It allows for passive returns with increased control and diversification. The structure also allows for mitigated tenant and maintenance risk, but it has increased dependence on market movements due to being appreciation based. If anyone has more questions or interest in the specific structure, I am glad to share. However, my main question is how investors determine a reasonable target, especially since some investors with access to higher capital are able to target projects with higher returns than the easily accessible passive or traditional opportunities.

I appreciate any advice or insight.

[Evan Polaski]

@Jonathan S., I know I already shared my input to your proposed structure.  But to the point of this thread, no one can offer a "this is a good return" without knowing the structure and the potential risks involved.

I think Jaycee hits on the general returns available in the market.  Without sharing greater detail of your proposed investment, no one can offer anything of value in terms of what types of returns they would want to see to compensate for that risk.