Updated over 9 years ago on . Most recent reply
Min. Amount of Capital Needed
What is the minimum amount of capital needed for someone who currently is not working, to purchase a commercial property, such as a motel, with a down payment of 20% and getting a mortgage from a bank, and being able to live off of the profit of the business (netting at least 40k after mortgage payments)?
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With $200K, you have a 20% cash on cash return with absolutely no reserves. Probably not.
With $400K, you have a 10% coc return or slightly higher return with reserves. More likely.
But all this is theory and number talks. Your biggest problem will be getting a loan. You mentioned you have no income. It sounds like you have no experience in CRE. Lenders in CRE take multiple things into consideration, including LTV, debt coverage ratio, your experience as an investor, your personal income, your net assets. If you have no hotel management experience, I don't think a lender is going to lend you money on a hotel purchase for instance, unless you have an experienced hotel management company in place.