b'For the past several years, the target annualized cash on cash return for investors has been in the mid to high teens. Prior to that, investors were seeking deals with cash on cash returns in the low to mid 20s. You can expect the investor cash on cash return target to fluctuate with changing market conditions, usually driven by such things as mortgage interest rates and higher demand for properties, etc. Step 1: Determine How Much You Need to RaiseDeterminehowmuchyouneedtoacquiretheproperty.Thisis calculated from the uses of funds that we discussed in Chapter 13.As an example; if you are acquiring a $4M property and can get a loan from an institutional lender with a 75% loan to value ratio, the loan amount will be $3M. You will need $1M for the down payment, as well as additional funds for capital improvements, closing costs, legal fees, lender fees and escrows, working capital and reserves and the asset managers acquisition fee. See Chapter 22 for a deeper discussion of this.A good rule of thumb for determining your raise amount for a value-add project is to estimate approximately 1/3 of the purchase price as the amount you need to raise. In our example, 1/3 of a $4M purchase price is $1.3M, so to be conservative, well estimate that you will need to raise up to $1.5M from investors for our example project. The biggest variable is the capital improvement budget, which can skew this number.196'