Does BRRRR work in commercial?

[Jason Rosenbaum]

Hi BP, I am a new investor looking for my first deal. I have been actively looking for 2-3 family and have put in a few offers but nothing has gone through yet. I would like to start to focus on commercial properties such as mixed use/larger multi/retail due to their higher returns. I’m having trouble figuring out what to look for in this space. Should I be solely looking for distressed properties to rehab and pull as much cash out as possible upon refi? If this strategy isn’t as applicable to mixed use/retail, what value add components should I be looking for and if the strategy doesn’t apply, how can one grow their portfolio after the first property besides full private lending? Is there any way to pull cash out on these properties? In addition, how can you determine what you should pay for these properties? Is it solely on comparable cap rates? I don’t understand how this is viable because if I am looking at a million dollar property a small change of .25 in cap rate could change the estimated value by over 50k depending. How can you run comps when this small of a change can have such a large impact on value? Thanks! -Jason