Basic questions about commercial deal analysis

[Benjamin Cowles]

So I've just been cramming my brain with the subject of commercial lending. I called a number for a small 3 unit commercial building. By his asking price and terms, 1/2 he'd finance and indicated room for negotiation, looks like 6% cap rate.

Then there's refinancing issue right? Don't get in if you can't get out? And in the end it all has to cash flow. 

Okay, so what's most important here? and what is least? Or are they all equally important or am I missing something entirely? It's in good condition, all units filled and on the main strip. 

I've little knowledge on this business but my imagination tells me with a little TLC and educated negotiation I could tweak up that cap a good bit. IDK. You tell me.

So obviously it needs to cash flow but by how much? Is there a % minimum you go by? Should I try to at least get a 5 year balloon and worry about refinancing later?

I'm thinking the cap rate at his initial asking price could work if he financed most of it otherwise it I had to partner up partners would need a better cap rate and change numbers accordingly. 

Realistically I'm just hoping to learn either I was missing something to complete the deal or it just wasn't possible or its my lucky day. Either way I'm looking towards my next lead. I just want to see me quicker to the draw with my knowledge in the future. 

Am I on the right page? The right book even lol? Thanks for any and all comments!