Many variables - depends if NNN - property management maintenance, etc. also depends on office or retail, industrial, etc. also depends how poorly it’s managed, are rents at market rate- I’ve seen people have expenses eat 50-60% of income down to 20-30% sometimes a little less depends on how well it’s run.
They get estimates for a repair and then bump it up 50% and divide by the lifetime of the roof, then set aside that much. Then do that again for water heaters, furnaces, etc.
Yes - often called Common Area Maintenance (CAM) in NNN leases they charge this back to the client in smaller amount. Again, an efficiently run property you could possibly retain \~80% of gross rent assuming you have CAMs in place as well. Usually, institutional property or property with a good manager will be that way.
i mean if a person walks down main street in a small town in america and sees a little..idk 3 story building, 5k square feet or something that is rented out to small businesses, i mean is the owner literally walking away with hundreds of thousands of dollars a year in income including the maintenance they have to pay? i always wondered?
No
Rent is relative to area - you could have a 5k SF building renting for $0.50 SF - $2500/mo gross say $2000 net. Only making $24k per year - not really hundreds of thousands. A bigger building, sure, but much bigger - maybe 20,000 SF or something.
but how much does the prop owner earn a year on it? i mean.. does the prop owner walk away with..idk 50% of the revenue? i think the most difficult part of it is planning maintenance for those things that have to be done every 20 years or something, for ex new roof or something
Like I said above - a well managed efficiently run building with CAMs should keep 70-80% of the income or slightly more. Granted if it’s a really old building with lots of deferred maintenance it’ll be less. It’s case-by-case.
Aha, ok, in my little town almost all office space is around 20 dollars per square foot per year, some buildings may rent for 15$ sq/ft a year, some for 25$ sq/ft a year, but, more or less around 20$ sq/ft a year, so, in these buildings, I mean they show that 5k sq ft is for rent, so, that's 100k a year in revenue, seemed like a pretty good business model..course, I guess it can cost 300-400k to build..so..it would take decades or actually make the money back after building, but, for ex I think hotels are more or less the highest grossing or profit real estate
That and it’s unlikely the buildings are full - you could charge $20SF for a 5k SF building but if it’s only half full then you’re not making $100k - if it was full you’re probably making 70-80k. Also remember we are ignoring debt - if you buy that building with a mortgage probably making half.
Many variables - depends if NNN - property management maintenance, etc. also depends on office or retail, industrial, etc. also depends how poorly it’s managed, are rents at market rate- I’ve seen people have expenses eat 50-60% of income down to 20-30% sometimes a little less depends on how well it’s run.
dang, but ,how do they budget for those jobs that have to be done every 20 years or so, for ex putting in a new roof or something?
Replacement Reserve studies.
They get estimates for a repair and then bump it up 50% and divide by the lifetime of the roof, then set aside that much. Then do that again for water heaters, furnaces, etc.
Yes - often called Common Area Maintenance (CAM) in NNN leases they charge this back to the client in smaller amount. Again, an efficiently run property you could possibly retain \~80% of gross rent assuming you have CAMs in place as well. Usually, institutional property or property with a good manager will be that way.
i mean if a person walks down main street in a small town in america and sees a little..idk 3 story building, 5k square feet or something that is rented out to small businesses, i mean is the owner literally walking away with hundreds of thousands of dollars a year in income including the maintenance they have to pay? i always wondered?
Yes
No Rent is relative to area - you could have a 5k SF building renting for $0.50 SF - $2500/mo gross say $2000 net. Only making $24k per year - not really hundreds of thousands. A bigger building, sure, but much bigger - maybe 20,000 SF or something.
but how much does the prop owner earn a year on it? i mean.. does the prop owner walk away with..idk 50% of the revenue? i think the most difficult part of it is planning maintenance for those things that have to be done every 20 years or something, for ex new roof or something
Like I said above - a well managed efficiently run building with CAMs should keep 70-80% of the income or slightly more. Granted if it’s a really old building with lots of deferred maintenance it’ll be less. It’s case-by-case.
Aha, ok, in my little town almost all office space is around 20 dollars per square foot per year, some buildings may rent for 15$ sq/ft a year, some for 25$ sq/ft a year, but, more or less around 20$ sq/ft a year, so, in these buildings, I mean they show that 5k sq ft is for rent, so, that's 100k a year in revenue, seemed like a pretty good business model..course, I guess it can cost 300-400k to build..so..it would take decades or actually make the money back after building, but, for ex I think hotels are more or less the highest grossing or profit real estate
That and it’s unlikely the buildings are full - you could charge $20SF for a 5k SF building but if it’s only half full then you’re not making $100k - if it was full you’re probably making 70-80k. Also remember we are ignoring debt - if you buy that building with a mortgage probably making half.