What Kind of Returns Are you ACTUALLY Seeing?

[Michael Blank]

So I've been looking for deals in the Washington DC, Baltimore and Richmond VA area, and I've spoken with a half a dozen other investors nationwide, and the theme seems to be the same:

NO ONE SEEMS TO BE FINDING ANY DEALS.

I have two questions:

1. My first question is, what kind of returns are you looking for in your deals? 

I'm syndicating my deals, so I will have investors involved. I am looking for deals with IRR's between 12% and 15% for the investors. (The 12% IRR for investors assumes they own 70% of the building and get no preferred rate of return, and the exit is in 5 years. To compare apples to apples, the IRR would be about 16% if I were to own the building 100% myself). I could theoretically achieve that kind of return by buying an 8 cap on actual financials as long as there is enough upside to achieve those returns.

But I'm just not getting into those kind of deals. I am being out bid by crazy money, I don't know where it's from and why they'll put up with lower returns.

For example, I'm negotiating a 46 unit (B- property) right now: the seller is asking for $2.1M, I'm offering $1.7M, the seller agreed to $2M and they're totally set on that number and won't consider holding a second. I can't pay any more than $1.8M to make my returns.

A 24 unit, C-Type Property in Baltimore, asking price is $1.2M, there are two offers at $1.0M but the bank is not budging from their asking price, my max price is $900K. At $1.2M the cap rate is 7.8% with a projected IRR of 6% (!!). Who is willing to pay that? On the other hand, at $900K, the IRR for the investors is 13% with a cap rate of just over 9% going in.

2. If you're doing deals, what kind of returns are you projecting for those deals?

I'd like to hear from people who are actually doing deals, and what kind of IRR you're projecting for those deals, and any info about these deals you're willing to share.

Thanks!