Do These Numbers Look Good

Very very preliminary. Purchase price, $600,000. Long term tenants. Net operating income of $150,000 a year. Expenses of $56,000 a year. Cash flow after mortgage, $5,500 a month.



Comments(7)

  • JSterling201st March, 2011

    Thats a 25% cap rate and 11% after debt service. Sounds too good

  • billfaith1st March, 2011

    It does doesnt it? I need to look into this a little further.

  • billfaith4th March, 2011

    Thanks commerical king. This is not on the mls, and not in my city but fairly close. These are actual last years numbers.

    For one its an old building, and I dont think the value is so much in the building.

    The biggest thing though I think is that 2 biggest leases, with a very big corp, come up for renewal this year. If they left, the building would be almost worthless. The space would be hard to re-rent. Its in an older part of town.

    If they renew, which would be for 3 and 5 years, the numbers I gave would be pretty accurate.

    No deferred maintenance. My big fear is the leaeses.
    If these 2 tenants left this year, I or just about anyone else would be toast.

    Now the seller said, he has been hearing some good things about them staying, but who knows..

  • commercialking4th March, 2011

    Go to contract with a contingency for re-negotiating the leases with extensions. Remove the uncertainty.

  • billfaith5th March, 2011

    How long is escrow for a commercial property usually?

    Seller says this company wont talk about lease renewal until 6 months before expiration. That means the one that expires in august we could discuss soon, but the one in november we could not until May. With a 30 day escrow or even 60 day, we wouldnt know if they were staying??

  • billfaith11th March, 2011

    I talked with the commercial broker in town that sold this building to the seller 5 years ago.

    His biggest concern about the building is location. Its not in a bad area, just in an older part of town, far off main roads. His thinks if the main tenant decides to leave, even after 5 years, that it would hard to re-rent, almost impossible to get the same rent amount.

    So I would be sitting with a building, probably worth less than I bought it for, and no tenant.

    Not sure how that should fit into the big picture here.

  • bogert7th March, 2012

    It sounds very good to me. Thumbs up again

Add Comment

Login To Comment