Test your investment analysis skills with this quiz. Answers tomorrow. If you can’t wait, follow the link at the end. Here goes.
You bought a piece of commercial real estate as an investment for $900,000 last month. You put 30% down. Because this was a former gas station site, you had to do some studies totaling $8,000. Your loan had 1 point. You collect $5,400 per month in base rent. It’s a triple net lease. Taxes are $9,100 a year, insurance $2,000 per year and CAM’s $2,400 per year. Your additional operating expenses on the property are $300 per month. You set aside 5% for future capital improvements. Your loan payment is $4,622 (PI) per month.
1. What is your initial investment?
2. What is the cash flow before taxes on this investment property?
3. What is the cash on cash return for this investment property?
4. What was your cap rate on this purchase?
5. What price should you pay to get a 7% cap rate?
Deal or no deal?
via Smith Real Estate Services. (A commercial investment blog to watch)
As one of the few commercial bloggers out there, I appreciate this reminder to cover more commercial topics. You highlight a great quiz from a solid blog. Thanks for always pushing forward!
Thanks Brad. You are one of the pioneers. We need more commercial real estate and investment property blogs.