7047 commerce in OB (Bill Harrell)

Small 4800 sq ft retail building at corner of Goodman and 78 in Olive Branch. Bill Harrell is agent. He said owners want to sell but he did not have a price. He said rent is about $16.90 per foot with modified gross lease. So if annual rev is about $81,000 and and I take away 10% for vacancy and collection loses, the revenue is about $72,900 per year. Expenses are $25,000 per year (That's only 31% of gross rev but that's what I calculated them to be) then NOI is $72,900 - $25,000 = $47,900. At 9% cap rate, building is worth $532,222.

Desoto County appraisal is $438,182. To get a return (after paying note each month) of around 12.5%, you could offer no more than $425,000. That's with 70% mortgage and 7% mortgage rate.
$425,000 x 70% = $297,500. Note each month is $2674 so annual debt payments are 12 x 2674 = $32,088. Cashflow after debt service is $47,900 - $32,088 = $15,812. If buyer puts in $127,500 (30% of sales price) then return on equity is $15,812/$127,500 = 12.4%