I crunched the numbers for new construction in Denver last year, and they work out to about a 6% return. You could do better in an index fund. Remember that much of the cost of new construction is in land, utilities development and rough construction. Finishes are a small part of the expenditures yet can take a year before you get a C.O. ( certificate of occupancy). ~3 years from land purchase/planning to move in. Tax incentives are a huge part of making it work but I didn't factor it in because I don't know that game as well. The hold time is 7-10 years from what the developers I've talked with recently. They rely upon REITs to purchase the building when they sell.
I crunched the numbers for new construction in Denver last year, and they work out to about a 6% return. You could do better in an index fund. Remember that much of the cost of new construction is in land, utilities development and rough construction. Finishes are a small part of the expenditures yet can take a year before you get a C.O. ( certificate of occupancy). ~3 years from land purchase/planning to move in. Tax incentives are a huge part of making it work but I didn't factor it in because I don't know that game as well. The hold time is 7-10 years from what the developers I've talked with recently. They rely upon REITs to purchase the building when they sell.