Commercial Real Estate can be a hard asset that yields a strong long term cashflow during the hold duration for those that invest in it. Today, we are going to look at some of the benefits of commercial property from a cashflow perspective.

Assuming the following are in place: A long term lease with a reputable tenant at market rental rate.

Monthly Cashflow: Investors will receive a handsome projected return on their investment on a monthly basis for a determined amount of time.

Predetermined Profits: with a tenant NNN lease, investors will know their net profits every year regardless of market, tax or other property expenses.

High Cash on Cash Return: Leveraging financing, one can increase the total cash on cash return which is expressed as a percentage of the annual cash flow after expenses over the total cash invested into the purchase thus far. Between 7-12% is considered a good figure depending on the market location, market cycle and the asset type.

Below is an example property:

Cash on Cash Return: A Beginner's Guide - PropertyMetricsFor the first 2 years the total invested cash is $500,000, until year 3 we have a $100,000 cost for improvement for the property, and hence the negative cash on cash return on year 3 and comparably lower rate returns for years 4 and 5.

If you would like to learn more about how you can leverage these principles to maximize the investments in your commercial real estate portfolio, call me.


Felix Galan
Brokerage Associate
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