Cap rate in commercial real estate

[Mike Khalil]

I been interested in learning and getting into the idea of purchasing a triple net strip center or shopping center but having a hard time making my numbers work when looking at a deal.

Example: $2M shopping center offered for sale at 7.25% cap rate, equates to a NOI of $145,000 a year or $12,083 a month.

Debt services =$8,200/m (25% down, 4% rate)

Insurance =$ 500-700/m

Taxes =$2000/m

=$10,700/m

that leaves you with a net cash flow of $1,383/m without factoring vacancies or any other major expenses.

Not very appealing on paper, am i missing something ?