What IRR do developers target?

Ground-up residential: 15–20% levered IRR. Mixed-use and commercial: 15–25%. Build-to-rent: 12–18%. Higher IRR targets reflect construction, lease-up, and market risk.

What are soft costs in development?

Architecture, engineering, permits, entitlements, legal, marketing, loan fees, and developer overhead. Typically 15–25% of hard construction costs.

How does exit cap rate affect developer returns?

A 25bps widening in exit cap at stabilization can reduce project IRR by 1–2%. Developers stress-test exit cap assumptions as the most important value driver.

Development Pro Forma IRR Calculator

Calculate IRR for ground-up development: land cost, construction, soft costs, lease-up period, stabilized NOI, exit cap, and equity contribution. Full development return model.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate IRR for ground-up development: land cost, construction, soft costs, lease-up period, stabilized NOI, exit cap, and equity contribution. Full development return model. Use the development pro forma irr result to inform your calculation.

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Frequently Asked Questions

What IRR do developers target?

What are soft costs in development?

How does exit cap rate affect developer returns?