Am I missing something about the math behind investing?

[Patrick Philip]

I was just reading a news story about a large real estate firm that bought a building for $154,000,000 and that the building has a NOI of $10,100,000. So cap rate of 6.6%.

I know that this firm most always buys with financing. Without knowing the details of their loan, I will take a somewhat educated guess of 80% financed ($123,200,000) at 4% over 30 years.

This amounts to loan payments of $7,058,107.68 per year. This will make their effective income = $3,041,892.32. 

Their 20% down payment would have been $30,800,000. This means that it will take over 10 years for them to see their initial investment back.

Is there something I'm missing?

[Alex Olson]

@Patrick Philip Have you considered that if you put $10,000 into the stock market and get 10% return each year that it would be an awesome return? Lop on top of that tax savings of paying no taxes on that money, and then throw on appreciation...that you can use to pull out as a line of credit or a cash out refinance. None of this exists with a stock market investment.