Читать книгу Commercial Real Estate Investing For Dummies - Peter Harris - Страница 55

When you’re looking at many types of income properties and analyzing them, you need to have a set of guiding principles for investment. Without them, you’d probably wander aimlessly in the real estate investment game.

We’ve established some starting guiding principles for you. These principles will set the standards for your investments and help you set working goals moving forward.

We’ve used the following standards for years ourselves and with our clients, and we’ve saved many people, including ourselves, from passing up that great once-in-a-lifetime deal or buying that deal that really stunk. Your guiding principles are basically fail-safe measures to guide you into cash-flowing, wealth-building investments and to keep you out of negative cash-flowing ones.

FIGURE 3-2: The breakeven point in this example is 55 percent.

Here are our guiding principles:

 Make sure that you have a positive cash flow. We believe that having positive cash flow keeps your momentum going. Positive cash flow allows you to leave your day job if that’s your goal. Positive cash flow allows you to invest more money, and it opens doors for the next investment to flow right in.

 Have a cash-on-cash return of 8 percent or greater. A good cash-on-cash return puts velocity on your money. It keeps your cash flow positive when you have those not-so-good months. A good cash-on-cash return allows you to brag to your investor buddies about what a well-run property you have.

 Have a cap rate of 7 percent or greater. A great cap rate means your NOI is healthy. A healthy NOI is stable and growing, which means your property value is doing the same. A great cap rate also gets you the best loan terms.

These are only starting guiding principles of investment. You have to start someplace, right? You may be thinking, “But you won’t find any 7 caps in my city!” And you may even believe that it’s impossible to find higher cash-on-cash returns. Or you may be convinced that it’s impossible to cash flow positively unless you put down 50 percent. Well, our reply to that type of thinking is this: Sooner or later, you’ll be convinced and support the theory that at any one time, great deals are out there waiting for you.