If someone were to invest say, $10 million in a land development/residential real estate project, what kind of return would you be looking for in order to consider it? Without getting too wrapped up in all the details, I know there are lots of factors to consider. Just as a silent partner in the project, paid out in 10-15 years. How would your expectations change if you were investing $100,000,000 instead?
Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
11y
Risk is a much bigger factor in my return expectations than amount of capital invested, though I would demand a premium for a larger investment amount if it resulted in less than desired diversification.
Rental Property Investor · Surprise, AZ · Member since 2014 · 196 posts · 86 votes
11y
Generally any investor is not going to base their required return on investment on the size of the investment. They will review the risk involved in the investment and then require a premium for that. At a bare minimum an investor will need a return higher than the risk free rate (generally the rate of a Treasury Bill for the same term length) plus a rate to account for inflation and then the a risk premium on top of that. The risk premium would be calculated based on the terms of the deal.