Cash On Cash - Syndication

[John Fortes]

When syndicating a deal, a good CoC return is considered to be greater than 10%. Are fellow syndicators aiming to achieve this as an average over the life of the deal or from day one of the deal?

For example: The business plan may call for lower CoC in year 1 and 2 while renovating units but may be higher in year 3 through exit averaging greater than 10% CoC, or must the business plan call for 10% CoC on day one forward?

Ultimately I would expect it to be through the life of the deal. What are people seeing syndicators doing to get their deals funded?

I completely understand that there will be all types of ways to tackle this and I'm looking forward to seeing what others are doing. 

Thank you!

[Alina Trigub]

@John Fortes It depends on your strategy and the type of deal you're undertaking. If for instance, you're buy a value add with a major renovation involved, I doubt you'd be able to pay 10% CoC from Y1.

Now, if you're referring to getting an average of 10% throughout the life of a deal, that's a lot more realistic and feasible to achieve. Keep in mind with the market heating up and cap rates compressing, the returns are affected as well. So one has to be realistic and ideally conservative when discussing it with investors.