Is This Commercial Lease Deal Considered Good?

[Alexandre Boustany]

Hi BP Community 👋

I'm an architect who has joined a real estate development company in Lomé, Togo (West Africa).

I’d appreciate your thoughts on a deal I’m currently analyzing. Here are the key details:

• It's located in Lomé, Togo (West Africa)
• It’s a commercial project located in a designated commercial zone
• We’re securing the land on a 40-year lease
• Our financial analysis shows that total revenue over the 40-year period would be 2x the total costs, including both fixed and operational/recurrent expenses
• The return on initial investment (construction and setup costs) is estimated to be around 14 years

Would this be considered a good deal in your opinion? What would you flag or look deeper into if you were reviewing this yourself?

Thanks in advance 🙏

[Nathan Gesner]

Quote from @Alexandre Boustany:

A 7% return will double your money in ten years. That's considered safe and could be achieved through a variety of investments that require less work and risk.

A good real estate investment with a 12% return will double your money in six years.

Getting your money back in 14 years? Terrible.