As an investor, deciding to invest in a commercial site building can be tricky. You’ll have to deal with building regulators, but you’ll also want to turn over a profit in the process. Making a profit requires foresight and smart calculation.
The YouTube video, “The Math for a Commercial Building,” gives commercial site building investors a model for investing.
The hypothetical example in the video involved a story building valued at $1.25 million that held an as-is upstairs apartment and two ground-floor apartments that were in good condition. A percipient investor could easily snap up the building by obtaining a bank loan to be repaid over 25-30 years, and by setting rents at prices that sustain loan repayments, still turn over a profit.
Say the rents for the two ground floor apartments averaged $6500 a month. The revenue over 25 years would pay for the building and still yield profit for the investor. After remodeling, the investor could comfortably live in the upstairs apartment or place it for rent.
The video illustrates why investors need the foresight to be successful. By making the right investments, they can stay profitable for a long time.