Effective Gross Income: A Calculation Guide

Effective gross income is a line item on a real estate proforma that is commonly used by appraisers, investors, and other commercial real estate professionals. Although the effective gross income is easy to understand conceptually, the calculation itself can sometimes be confusing. In this article, we’ll take a closer look at effective gross income and clear …

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Year Over Year (YOY) Analysis: A Simple Guide

Year over Year (YoY) analysis is a powerful tool for financial analysis that provides a direct comparison of performance between two periods of time. In this article, we will explore what YoY analysis is, how it is calculated, and why it is useful. We will also look at the advantages and disadvantages of YoY analysis …

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How to Use SUMIF In Commercial Real Estate Analysis

When working with a commercial real estate data set, there are occasions where it is necessary to create a sum for a range of values, but only if they meet certain criteria.  Fortunately, there is an easy way to accomplish this task using a built in Microsoft Excel function known as “SUMIF.” In this article, the SUMIF function …

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Introduction to Comparative Lease Analysis

Suppose that a medium sized accounting firm is looking to expand its footprint by leasing office space in a new city.  After touring several spaces, they have narrowed it down to two options.  The options have similar rental rates, but the firm wants to conserve capital so they need to figure out which one is less …

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How the Development Spread Works

The development spread is a back of the envelope calculation widely used by real estate developers. It is a fast and easy way to size up the financial feasibility of a real estate development project, before completing a more in-depth analysis. In this article, we’ll take a closer look at the development spread and walk …

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How The Double Net Lease Works

There is a wide spectrum of lease types in commercial real estate. To make it easier to communicate with others, it is not uncommon for complicated leases to be described using simple language. The ‘double net lease’ in commercial real estate is a term that describes a certain type of lease agreement, but it’s not …

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How The Single Net Lease Works

In the commercial real estate industry there are a variety of lease types and also various names used to describe those leases. The term “single net lease” is sometimes used in commercial real estate to describe a lease where the tenant is responsible for paying one particular expense. In this article we’ll discuss the single …

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Coronavirus Commercial Real Estate Survey Data

Last week we surveyed our audience about the immediate impacts of the Coronavirus pandemic on commercial real estate professionals. Below are the results and we will update with additional survey data over time.

How The Loss to Lease Calculation Works

Loss to lease is a commonly used calculation in a commercial real estate analysis. However, loss to lease can also be one of the most confusing calculations to understand, especially when you see it for the first time. In this article, we’ll take a closer look at the loss to lease calculations and walk through …

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Residual Techniques in Real Estate Valuation

Residual techniques in commercial real estate valuation are sometimes used to value a property, but these residual techniques are also often misunderstood. The income capitalization approach to valuation utilizes a cap rate that represents the value created by all of the real property. It incorporates the capitalization of income from both the underlying land and …

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