Understanding the cash on cash return in commercial real estate is important when you are evaluating investment real estate transactions. What is the cash on cash return, and how do you calculate it for a commercial property? What are the nuances and limitations of the cash on cash return? In this article, we’ll tackle these questions …
After winning a new listing, the first step in any CRE marketing plan is to build a commercial real estate marketing package. But if you go on Loopnet or pull up some random marketing email blasts, it’s amazing what some brokers try to get away with. Most commercial real estate marketing packages are really bad, especially …
The discount rate is one of the most frequently confused components of discounted cash flow analysis. What exactly is the discount rate, and how does it work? What discount rate should I use in my analysis? These are all important questions to ask, and this article will explain the answers in detail. Read on for …
Securing a commercial construction loan for various types of commercial real estate can be a difficult process to navigate. This post will shed some light on commercial construction loans and demystify the lending process. Commercial Construction Loans and Lenders The construction loan process begins when a developer submits a loan request with a lender. Construction …
After you win a listing for a commercial property the real work begins. You now need to deliver on your promise of selling the property for the highest price possible in the least amount of time. To keep your client happy, you also need to make the process stress-free for all parties involved. Want some …
Understanding the difference between the net present value (NPV) versus the internal rate of return (IRR) is critical for anyone making investment decisions using a discounted cash flow analysis. Yet, this is one of the most commonly misunderstood concepts in finance and real estate. This post will help you understand the difference between NPV vs …
The purpose of this article is to shed some light on how a bank evaluates a loan request from a potential borrower. But, before we get there, let’s have a quick review of how a bank works and who the key players are in the credit approval process. In it’s simplest form, a bank makes …
Understanding commercial real estate leases takes careful attention to detail. People will often categorize a lease as either a triple net lease or a full service (gross) lease. The reality is that most lease agreements fall somewhere in the middle of this spectrum where both the landlord and the tenant each pay some share of operating …
The capitalization rate, or cap rate, is a fundamental concept in commercial real estate. It is calculated by dividing a property’s net operating income by its value. Although the formula is simple, the cap rate is often misunderstood and sometimes misused. This article will explore the concept in depth and clarify common misconceptions. Cap Rate …
Understanding the terms of a commercial real estate lease can quickly become a challenging task. One lease term that people often find confusing is the expense stop. In this post, we discuss what an expense stop is, how an expense stop is typically used, and then walk through an example to bring it all together. …