[Calc Review] Help me analyze this deal - Multifamily in N Ca

[Kristin Cooper]

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*This link comes directly from our calculators, based on information input by the member who posted.

[Benjamin Aaker]

Congratulations on getting far enough to evaluate a deal and having the guts to post it! Not every deal is going to be great and that is what BP is here for.

Notice how your Cash on Cash return is negative up until year 5? That means you will be losing money for the first five years. It's also unlikely that you will be able to get a 30 year term on a commercial property. These are generally 20 years and you will need to refinance somewhere in the middle like at 5 years. Your debt service will be higher and this will push down your returns further. If you have the money to 'subsidize' it and you are in it for the long haul, then you will likely have an income producing property. The problem is that it will stunt your real estate growth because you won't have the money to invest in other properties.