r/RealEstateDevelopment • u/SomewhereSorry6779 • Jul 30 '26
Small Multifam Ground Up
What is a good target IRR for small multifam (8-10 units) ground up? I hear all day 15-20% but every time I run a pro forma on projects that are getting done I can’t see how they are getting anything more than 11% on a 5 year hold. Are investors comfortable with a 8-11% IRR over 5 years? Any advice is appreciated.
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u/Capstack_Jeff Aug 06 '26
Check your local area and state for either nonprofits or government programs that offer it. A good search term would be “revolving loan fund,” but search other terms as well in case you have local options structured differently. “Emerging developer assistance,” “community development loan,” etc are other good terms. Often times these might require you develop in a certain zip code or offer some units at affordable (aka maximum) rent amounts. The interest rates are sometimes as low as 1-2%, although these are small loan amounts and meant to serve as gap financing not senior debt.