How does this large firm make money on this retail property?

[Patrick Philip]

https://therealdeal.com/miami/2017/03/29/thor-equi...

You see this large firm? Okay so they bought this property for $15 million. It is 5,000 sq. ft. and rents for $300/sq. ft./year. (It doesn't actually say the rent for the 1,700 sq. ft. rented to Pizza Rustica, but I'll just say $300/sq. ft. just like the rest of it). So in that case, this property pulls in $1,500,000 per year in revenue. Using the 50/50 rule as a "rule of thumb" that means that they keep $750,000 in profits per year on this property. (They are professionals, so maybe they do better than 50/50, but I'll use it anyway). Now this is before debt service.

If they financed 80% of this, that's $12 million. Let's just say 3.5% over 30 years. That's about $662,000/year in mortgage payments. So they are profiting $88,000/year on this property? That they put $3 million into? Meaning that it will take them 34 years to break even? That doesn't seem like a business ANYONE would want to be in, let alone guys who see themselves as really smart.

Doesn't seem to make sense. Is that really how large firms work? It's the same seemingly low income that is seen is regular financed SFH rentals.

Do you think my numbers are accurate?