Breaking Even first few months but will cash flow within 6 months

[Mario Morales]

Mix use, commercial space on 1st floor locked in to lease until 2024. 900 a month, sucks a bit. The other two units are under market price. Rents can go 30% per unit. I know that we should look at the present, but this is a buy and hold for me as the location is excellent. Any thoughts or advise, greatly appreciated. 

[Evan Polaski]

@Mario Morales, almost every value-add deal is going to be barely breaking even the first several months, and sometimes depending on the scale of the project, first year or two.  

With these types of deals, you need to make sure you are either extremely accurate on your model and assumptions, or conservative.  Are you sure you are able to bump rents?  Can the tenants absorb that or will you essentially be forcing a vacancy?  If vacant, how long?  (A note: there are not a lot of new businesses opening these days).

But the point being: the vast majority of people on BiggerPockets will say: "Only buy for what's in place".  And that is true if you are buying a fully occupied, property at top dollar.  If you are buying any type of value add or opportunistic property, you will almost always be paying, at least a bit, for future cash flow opportunities.