Calling all commercial property owners...
For anyone on this forum who owns commercial property(retail,multi family etc.), 

1)what factors made you purchase your asset

2) financials behind the property. 

3)how did you find it?

4)how long do you plan on owning it for?



[{"id": "dzpxsvh", "text": "Own multifamily. I've purchased to generate cash flow and replace my day job income.\n\nYou need to carefully evaluate any commercial property as you are buying a business. Sellers will attempt to make things look as positive as possible to get the best price, or just to get it off their hands.\n\nYou need to be very thorough in your due diligence to make sure you really understand the property before buying. \n\nThis is just where it all starts. Without good management, which is very hard to come by, your property may not make any money. No one really teaches this and many find out the hard way how hard it can be to run a business. ", "replies": [{"id": "dzpy0nl", "text": "Thanks for the response.  But how much does one really make in cash flow a year? Would you share how much you take away from a property after your mortgage. Is it enough to live on for a year? I know you\u2019re building wealth and it takes time. ", "replies": [{"id": "dzpyec3", "text": "It's not that easy. The cash flow is dependent on the price you pay, versus how much net income the property generates. This is called the cap rate.\n\nSimple math - if you buy a property for $1million, at a 10 cap, it would generate $100,000, before mortgage payments. The cost of the mortgage depends on the terms you negotiate. You can easily play with mortgage costs on Google.", "replies": [{"id": "dzpyn34", "text": "Right - I understand all that just want to know the cash flow you take away from your specific property. I feel like after all expenses are accounted for, it\u2019s difficult to make a lot of money from a building most of the time. ", "replies": [{"id": "dzpyryi", "text": "Net income means after all expenses, but not including mortgage payments.\n\nAgain, this is why the cap rate is important. If the property is only selling at a 5 cap, then that would leave very little, if any income after expenses.", "replies": [{"id": "e0xtr01", "text": "Cap rates are calculated using NOI.  That is effective gross income less OPERATING expenses.  CapEx is not included in this calculation and can wipe out any NOI left over after debt service.", "replies": [], "depth": 6}, {"id": "e0xtzth", "text": "Cap rates are only important to tell you what the market is paying for NOI.  It is not a profit metric.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "e0xthhg", "text": "But cash flow and cap rate are not profitability metrics so the higher cap rate with the possible higher cash flow may never materialize, may be eaten up with capex, or returned upon sale.  Although cash flow is something you need to account for in your investment you should probably look more at investing for profit.", "replies": [], "depth": 4}], "depth": 3}, {"id": "dzq6ym1", "text": "Cash on cash return on most of the multi family deals I've been involved in have going in cash on cash returns in the 7-10% range with cash on cash increasing to 9-15+% in later years after value add has been completed and rents have been raised. These are primarily C-B class properties in the Midwest. Also keep in mind most of the cash flow is sheltered by depreciation making distributions in the first 5-7 years nearly completely sheltered from income tax.  ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzq7h6e", "text": "1) Had a major national retailer (pharmacy). \n2) Constant roi\n3) Realator\n4) Until I die. ", "replies": [], "depth": 1}]