All Forum Posts by: Jay Gill

Sorry forgot to ask, about rental increases.  It was my understanding that these are always negotiable and sometimes the landlord can't always exercise the full the rental increase but sometimes can only get partial. 

Awesome, Awesome input Joel. You're right I was just analyzing STNL's with NNN. I thought it would be the best option since I was going to be an out-of-state investor and it would require minimal management. I've been looking at other types of properties but they more management intensive.

Another thing I notice is that these structure's are too specific to the tenant.  So if they decided to vacate it would be costly to renovate.  Plus some of these stores, especially Dollar stores use cheaper metal frame construction.

To your point of investing strong suburban areas, I personally thought these areas in and surrounding major metros are dominated by large investment groups and it would difficult to enter this space.

The major thing I'm seeing is that nationally recognized tenants, such as fast food chains, pharmacies, dollar stores and regional grocery chains don't really yield a cap over 5% or don't have a lease more than 5 years.  Unless you go to smaller rural cities.  

I was looking for the past while . I noticed a few decent deals, but I find anything 10+ years and with a decent cap is mostly located in remote rural areas.  How important is location?  Is it worth pursuing these deals? Or should I wait for something to come up in more populated locations?

Thanks for the replies guys. 

As the subject implies I am just at the learning stage when it comes to commercial real estate investing.  I am just running a few hypothetical numbers based on hypothetical down payment. I am just analyzing the results and assessing how realistic they are.

Assuming I have a 500k down payment.

A)Cash on Cash return( desired is 10%) = cashflow / Down payment(500K)

Cash flow = 50K

B)Then determine desired Net operating income, assuming 30 amortization and 35% down at 4.5% interest rate

NOI = Cash flow + Debt

NOI = (50K) + (928,571 @ 4.5%, 30 amortization)

NOI = (50K) = (4,705 mthly *12months)

NOI = 106,460

C)Desired cap rate,

Purchase Price / NOI = Cap Rate

1,428, 571 / 106,460 =  13.4% 

Assuming I didn't mess up my math.  Is a 13.4% cap rate realistic?  Also any other suggestions in terms how I could improve my analysis based on numbers. As an aside I know there many other factors when analyzing a deal, but at this point I want to get a feel for the numbers.