Buy and Hold Real Estate Investing - How To Run The Numbers

Buy and Hold Real Estate Investing - How To Run The Numbers // In the commercial real estate industry, money is made in transactions. And this is true for real estate brokerage firms, real estate private equity firms, real estate lenders, and even other third parties like real estate appraisers, title companies, property inspectors, and any other companies associated with the buying or selling of commercial real estate properties.

But for commercial real estate investors, especially individual investors without third party equity, that money that is made in transactions is actually coming OUT of THEIR pockets through things like brokerage commissions, legal fees, escrow fees, loan fees, prepayment penalties, and a host of other nickel and dime costs that significantly add up over a real estate investing career.

And to avoid this, many real estate investors who are investing for cash flow and wealth accumulation over time, will employ some sort of a “buy and hold forever” strategy to reduce their transaction costs, take advantage of long-term growth in real estate values, and ultimately own commercial real estate assets free and clear once debt is paid off over time.

So if you’re looking at a deal with an indefinite hold period, how do you actually analyze a deal like this? And without a projected sale date or value, what return metrics should you be looking at to value a deal you’re thinking of acquiring and holding for the long-term?

That's what we'll cover in this video.

[BreakIntoCRE]

What do you look for in buy and hold "forever" deals? Anything I missed in the video? Let me know in the comments below. Thanks for watching!

[joshengen]

I have a feeling this YouTube channel is gonna blow up at some point. Great info, thanks for uploading!

[batmankiller]

Love your content! I have a much better understanding of real estate investment because of your channel.

[ankurchadha]

Thanks Justin. Is there a lesson on the Break into CRE Academy for these 'hold forever' type investments? I can't seem to find it on there. I am currently analysing a family portfolio using the standard IRR metrics but would like to change it as mentioned in your video. Any help with a model spreadsheet would be great.

[jonahsekakoni]

Great videos as always. One question on how to quickly value a real estate portfolio. How is that usually done in practice given the limited amount of time usually available to close on these deals. I am asking this wrt to distressed asset sales by large real estate companies or banks / financial institutions. Thank you.

[LGoromonzi]

Another classic, Justin. THANK YOU!!!

[TurdLips]

Great summary Justin. I had always wondered about this topic. If I wanted to compare indefinite-hold investments against each another, what metric would make most sense? I defer to CoC return, but then the question arises as to what happens after a cash-out refinance and there is no longer any initial cash in the deal? Would you then switch to using ROE? Thanks for the help!

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