What % of return will an investor look for.

by GWB
(Barrie On. Canada.)

I am a small time renovator.
I have just come across an attractive property with a house on it that will need to be bulldozed.
Before I do anything I am gathering information for my feasability study.
I need investors willing to put up the cash to buy and build a new house on the lot.
What % should I offer to potentail investors and/or will they expect.

Hypothetical scenario. $600,000 to purchase, build, sell ,flip within one year. Average selling price is $750,000 for decent house (approx 3000 sqft).Area is just north of Vaughn Ontario. Profit should be $60,000,
plus what ever work I put into it. Around another $60,000

Three investors at $200,000 each.

So far I have heard anything from 8% to 20%
8% works great, 20% I wont even consider the project.

Comments for What % of return will an investor look for.

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Nov 17, 2010
RE: What rate of return should be expected on a buy, build sell project?
by: Tom Karadza

Hello Barrie Ontario,

For this the given rate of return should be whatever the market (your potential investors) will accept as acceptable for the risk involved.

Some people will look at that project and think you're nuts (which you aren't!) and want a high rate of return.

Others, with perhaps more intimate knowledge of you, your track record, the area etc. may think it's less risky and ask for 10% on their money.

So it's whatever your market will bear as an acceptable return.

I know that's not giving you a number but hopefully something to consider.


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