Good question - it gives you the price per square foot you need in order to achieve a 10% cap rate upon completion. I don’t look at anything under a 10% cap rate if I’m doing value-add, but you may be comfortable with different numbers.
NOI is a before debt measure. If you paid cash you’d get a X% Cap rate or $XXX. NOI. You would take your NOI minus debt service to look at your COC (cash on cash) return. One reason is everyone doesn’t use the same debt ratios, interest rates or length of terms so the NOI or Cap is where you would run your specific debt terms off of. Hope that makes sense and answers your question. I’m not an expert by any means.
Yeah or what’s realistic, really. Ideally, I could hit a 100% cap rate 😂 but realistically, I know I can hit a 12% cap rate or better. So it’s really what’s worth your time to focus in
I dont understand why the debt service was removed when calculating the NOI in his analysis example? Debt Service is the mortgage right? So if we are trying to estimate the value of a property we wouldn't calculate because once sold that expense would fall onto the buyer? I could be overthinking this.. .
I’m looking to get into real estate. There’s a commercial building listed for sale for $1.7m. Currently it’s bringing in about $175k in annual rent. Would you consider this good?
Download my deal analysis toolkit: www.tylercauble.com/deal-analysis-toolkit
I always love these videos. Thank you for sharing your expertise!
Great info! Thank you for sharing!
West coast friendly stream, can’t wait!
Let's gooooooo
Great video! Keep up the great work educating us on CRE.
Great breakdown of the commercial property buying process!
Thank you for doing this. All this information is so very useful. And thanks for the QR code😊
I always watch all your videos
Appreciate it!
@TylerCauble Your videos always stand out from others
Great info!
19:14 What’s the absolute minimum due diligence period recommended for a rookie in commercial?
I recommend 60 days. That gives all of your vendors and your lender enough time to knock out what they need
10:43 why is 10% the factor used to calculate the needed $psf NNN rate?
Good question - it gives you the price per square foot you need in order to achieve a 10% cap rate upon completion. I don’t look at anything under a 10% cap rate if I’m doing value-add, but you may be comfortable with different numbers.
NOI is a before debt measure. If you paid cash you’d get a X% Cap rate or $XXX. NOI. You would take your NOI minus debt service to look at your COC (cash on cash) return. One reason is everyone doesn’t use the same debt ratios, interest rates or length of terms so the NOI or Cap is where you would run your specific debt terms off of. Hope that makes sense and answers your question. I’m not an expert by any means.
great advice to commit and consistency. I say to underwrite a deal a day too. IOS is hot hot hot! I love mine
When it comes to cap rates, are you just picking what you would want?
Yeah or what’s realistic, really. Ideally, I could hit a 100% cap rate 😂 but realistically, I know I can hit a 12% cap rate or better. So it’s really what’s worth your time to focus in
Could you do a video. On how to find business to lease. Like you did with the retail center.
Yep! I did do one:
ruclips.net/video/klamn9zxWSE/видео.htmlsi=ta4hCqGftH-phlqP
@TylerCauble great thanks!
What if I want to purchase a commercial property to start a business?
I dont understand why the debt service was removed when calculating the NOI in his analysis example? Debt Service is the mortgage right? So if we are trying to estimate the value of a property we wouldn't calculate because once sold that expense would fall onto the buyer? I could be overthinking this.. .
I’m looking to get into real estate. There’s a commercial building listed for sale for $1.7m. Currently it’s bringing in about $175k in annual rent. Would you consider this good?
Do u need license can u just buy the property