MF Development Modeling Question
I’m currently modeling a ground up construction multi-family deal. Question is on how you calculate the IRR and EM. The assumption is that the property will reach full stabilization at month 38. Assuming the deal is a 7 year hold. Do you calculate IRR & EM once the property reaches stabilization (and 7 years from there), or do you calculate it when the first capital is deployed on the project (meaning 3 years or so construction/stabilization period and 4 years of positive cash flow).
If I’m interpreting your question correctly, it seems that you’re asking when the “hold” period begins (Month 0 at land closing, or Month ~24 when construction ends). I think most people would assume that the total hold period begins Month 0.
So the IRR would calculate off cash flows going from Month 0 to Month 84.
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