When you purchase commercial real estate what cash in cash return are you looking for ideally?
What factors do you look at and what do you expect when looking at potential deals? 
Do you expect a certain cap rate? 
Occupancy? 
1% Rule where monthly rents are 1% of the purchase price? 
Do you look for value add for example below market rents that can be raised immediately to boost NOI and add value?
[{"id": "fxk8lbv", "text": "Cash on cash is a metric looked at on stabilized properties that are bought for the monthly cash flow, rather than a large reversion upon sale. My firm operates office buildings are we look for 5-8% CoC returns.", "replies": [{"id": "fxkey4o", "text": "Ok understood however elaborate what do you mean by large reversion upon sale. I am assuming your referring to improving the NOI via increasing income and reducing expenses to boost the property value and sell at a profit?", "replies": [{"id": "fxkxg1w", "text": "Yes, it simply means that they are focused on forced appreciation rather than cash flow. The rate stated above is fairly normal for CRE firms depending on the market. We have bought properties and had a 2% COC return for a few years while making improvements and repositioning the asset before ultimately selling it and realizing an IRR in the high teens or low 20% over the holding period.", "replies": [], "depth": 3}, {"id": "fxlije3", "text": "Reversion, means when the asset is sold. Cash flow from reversion would be the sales price, minus comission. This can either be calculated before or after tax (capital gains etc), after tax is more important for comparative purposes.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fxncebi", "text": "Your firm do they invest in stabilised or value add properties? I\u2019m assuming maybe stabilised. What\u2019s your firms strategy? Do they try to boost the NOI and add value then sell or refinance at a higher value to acquire more buildings and repeat essentially BRRRR or do they just buy stabilised properties with stable returns such as Class A Properties with perhaps low cap rates and low risk etc.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fxk9h98", "text": "Take this with a grain a salt because I'm new to CRE investing this year, but I'm mostly looking for a sustainable place to grow capital.\n\nIt's really hard to say because my risk tolerance will vary from class to class and even property to property, but generally I'm looking for at least a 7% CAP rate, and really more likely 8-9% on average. An apartment building that is going to return a CoCROI of 7% or greater is extremely interesting to me, but nearly impossible to find around the area I'm looking. Around here anything residential tends to trade around 2-5% CAP.\n\nValue add opportunities are great, but I prefer an incremental improvement on NOI to a large rehab effort that has higher upside but a great deal more risk. My opinion on this might change if I find a general contractor I am extremely happy with, but no dice on that front so far.\n\nI'm in this for the long term gains, so while I won't buy a total dud on year 1, I am more interested in years 5 and 10.", "replies": [{"id": "fxkxr7e", "text": "I\u2019m kind of confused by your distinction between cap and \u201ccocroi\u201d. How are you looking at 7 cap properties but only realizing a 7% return? We buy properties with cap rates in the 5.5-8 range but realize a COC return of 15+% every day.", "replies": [{"id": "fxl1ve8", "text": "Are you saying you're turning 8% CAP into a 15%+ CoCROI by leverage alone? If so, at what terms are you financing those deals?\n\nI underwrite with 20yr 4% because I know I can get those terms for sub-$5m properties at a lender that's extremely easy to work with. I can generally bump CoCROI by ~3 points if I pursue a 25yr am at another lender, but they're not as flexible or easy to work with, so I don't bank on it. With terms like this, I don't know how I can turn an 8% CAP into a 15% CoCROI unless I'm at like 90% LTV.", "replies": [{"id": "fxl3e2h", "text": "You\u2019re completely right that it is leverage and capital source dependent. Now looking at the specific numbers I\u2019ll admit that you\u2019re right that 15 might be overrated. I realize my comment wasn\u2019t made with the typical borrowers perimeters in mind and even for me doesn\u2019t represent every deal. But I have done several deals (in the $4-6mm range) where I\u2019ve been able to secure 20% down and 4.2% 5/25yrates which has brought me to 14% COC.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fy9zy5y", "text": "&gt; I'm looking for at least a 7% CAP rate, and really more likely 8-9% on average\n\nI can sell you 7-8-9% cap rates all day long.  Why are you targeting those numbers?", "replies": [{"id": "fyabuzh", "text": "Those CAP rates tend to coincide with the level of risk I'm willing to take on in the area I'm interested in investing in.", "replies": [{"id": "fyacc22", "text": "So you are saying you are investing in markets where properties are trading at 7,8,or 9% cap rates not that you will buy a 7,8, or 9% in any market?  That make more sense.\n\nBut you do realize that cap rates can reflect risk level it does not measure risk.  A 10% cap rate is not always riskier than a 5% cap rate and vice versa.  You need to look at the real reasons investors are paying more or less for NOI and it can be that risk is a very small part of that.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fxkgun7", "text": "I'm new to CRE as well, but I look for 8-9% annualized CoC return over life project, usually 5-7 years. 15% minimum IRR. I don't really care about the Cap Rate and you shouldn't either. The cap rate more or less is an indicator of the risk, lower cap typically means lower risk. Lower cap properties are A class properties and higher risk are c/d properties which commends a higher cap rate. When i look at a property, i underwrite it to what is the price I need to pay in order to meet my metrics of 8-9% CoC and 15% IRR. I make my offer at the number that works for me and move on. Lot's of no's so far but I'm hoping for a yes this year on something in the 10-50 unit range.", "replies": [], "depth": 1}, {"id": "fxkjtwu", "text": "20% COC in the mhp space. Assets trade anywhere between 7-14 caps", "replies": [{"id": "fxkr1xp", "text": "MHP? Multifamily? What assets trade at cap rates that high you in the hood or something? Also 20% COC return that\u2019s really good I would advise you don\u2019t sell the property as it appreciates pull out equity via a cash out refinance instead.", "replies": [{"id": "fxkrz9z", "text": "Mobile home parks", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]