I am planning on going partners with a family member on a commercial real estate investment. Maybe a strip mall. The one I am focusing on has an asking price of just under 9 million. The plan is for my partner to put up 1.5 mil in cash (1031 exchange) and I will go on the note for the rest. I have excellent credit (about 715 average between 3 credit scores). The NOI on the investment would be about 645,000 annually. Does this seem feasable? We are each looking for a cash flow of 75 - 100K to live on plus the ability to pay down the debt as we go. Currently the strip all is 100% occupied with good strong tenants. Thoughts? Suggestions?

Thanks!

Say you're seeking a loan of 7.5mil as you hint at. And you are able to get a Interest rate of 6.5% amortized over 30yrs, annual payment of $598,772. Debt Service ratio 645,000/568,861=1.13 yearly cashflow of about 76,139. Is this what you had in mind? The interest rate of 6.5% is very speculative.

Thank you for the response. Are there any loans that you know of that would allow for more cash flow up front? In other words so we can take money out as income right from the start instead of using all the cash generated to pay down the mortgage?

Under the scenario you are proposing, your LTV is 83%. A bit high as most lenders will want to see you with 20%+ into the deal.

The DCSR is also a bit low. Typically should be 1.20+ Based on your NOI figures, the max. loan amount with a min. 1.20 DSCR, 6.5%, 30 years is just over $7,000,000. This assumes that you have figured in things like management, capital reserves and vacancy/loss to lease in your expense figures. The interest assumes that you have adequate downpayment and meet min. DSCR guidelines.

If NOI figure is correct, the property may be overvalued at the asking price.