A lot of investors judge a deal by how quickly it starts paying them.
That can lead them to miss where the value is actually created.
In a stabilized rental, value creation and cash flow often happen at the same time. The property produces income, and investors get paid from that income.
Development works differently.
The value can be created during the years of construction, while the deal produces little or no cash flow.
The money gets made during the process and gets paid later.
That is why focusing only on the timing of the first check can lead investors toward deals where most of the value has already been created.
With development, investors can participate while that value is still being created.
How much does the timing of cash flow influence the way you choose your investments?