Articles

Yield on Cost: A Beginner’s Guide

The yield on cost is a commonly used metric when evaluating real estate development and value-add projects. It is easy to calculate and is useful as a back of the envelope calculation. In this article we’ll take a closer look at the yield on cost in real estate. Here’s what you’ll learn: What is the …

Read More

Modern Portfolio Theory: What It Is & How It Works

Modern portfolio theory is widely used in the world of finance. In this article we’ll take a closer look at what modern portfolio theory is, review an example calculation, and discuss the assumptions behind the theory. What is Modern Portfolio Theory? Modern portfolio theory (MPT) is widely used in finance and commercial real estate to …

Read More

Year Over Year (YOY) Analysis: A Simple Guide

What is Year Over Year (YOY)? YoY stands for Year over Year and is a type of financial analysis used to compare results from a period of time in one year to the same period of time in the prior year. YoY analysis is widely used in finance and economic analysis and is helpful for …

Read More

Gross Income Multiplier: A Calculation Guide

The gross income multiplier is a metric used in commercial real estate valuation by analysts and appraisers. It is easy to calculate and requires little information, but it does come with some limitations. In this article we’ll take a closer look at what the gross income multiplier means with several examples, including the potential gross …

Read More

What is a 1031 Exchange? A Beginner’s Guide

To minimize or defer the tax bill when selling investment real estate, investors commonly use what’s known as a 1031 or Like Kind Exchange. In this article you’ll learn what a 1031 exchange is, how a 1031 exchange works, what the 1031 exchange rules are, the 1031 exchange timeline, and then we’ll cover some frequently asked …

Read More

What You Should Know About Nominal and Effective Interest Rates

Interpreting interest rates is not always as straightforward as it seems and getting it right can have important implications for all parties involved in a commercial real estate transaction.  Interest rates can take two forms: nominal interest rates and effective interest rates.  As a result, there can be some confusion about what a quoted interest …

Read More

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 …

Read More

Understanding The Right of Offset

Whether you work at a financial institution, develop real estate, invest in property, or act as a broker, there’s a common thread that binds all facets of the real estate world together.  It’s highly likely that you have one or more financial products like a credit card, debit card, deposit account, car loan, commercial real estate …

Read More

Introduction to Lease vs. Own Commercial Real Estate Analysis

Imagine you are a mid-level manager at a fast growing small business.  As part of the company’s expansion plans, you have been tasked with finding office space in a new city and deciding whether to lease it or purchase it.   Fortunately, there is an objective way to make this decision.  But, it can be a little …

Read More

Understanding a Commercial Real Estate Rent Roll

When real estate investors are evaluating a potential rental property purchase or a bank is underwriting a potential loan, one of the first documents that they will ask for is the property’s “rent roll” or “rent roll report.” In this article, the rent roll document is described in detail and its utility in the CRE due diligence process is highlighted. …

Read More