What is considered today a good cash on cash return and IRR for a new office building in Boston.

In Market Conditions - Asked by George A. - Sep 12, 2009
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Anthony G.
Toms River, NJ

George A.
Good cash on cash returns generally start with what your alternate investment options are. You can buy nearly risk and management free corporate lease deals today for 8% cash on cash; some with favorable financing at 9% cash on cash.
What's a "new office building in Boston" mean? big, small, risky, leased to a single tenant? To be competitive in the urban downtown market, I bet you need to be in the 8%-9% range. to be a smart investor and get a "good" return - I think you should be seeking 9%+ cash on cash. If you get 50% financing @ 8%; you're looking at a 9%+ cap rate.
For higher turn-over, management intense or older building with high maintenance (basically a B-Building); that's probably the right going-in cash on cash today.

Oct 6, 2009
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