WHAT TARGET COC RETURN FOR YEAR 1?

[Jordan Santiago]

Hey BP,

I have a question for anyone experienced in value add deals, specifically large apartment complexes. Being that the rents are below market value, and the loss to lease is high for a lot of value add deals, what are you guys targeting for your Cash on Cash return for Year 1?

Are you guys basing your offer on achieving an 8% cash on cash return (or whatever your goal is) from Year 1? Or are you looking to achieve that post-renovation? I am guessing the answer is post-renovation, but I want to be sure. 

Any advice, or feedback is appreciated. Thank you!