Cap Rates in Commercial Real Estate: The Basics Any Investor Should Know

An Introduction to Cap Rates in Commercial Real Estate

When considering the purchase of a commercial real estate asset, all investors will use a property’s existing cash flows to create a “proforma” financial projection of future cash flows. That projection, which includes allocations for income and expenses serves as the basis for calculating the property’s potential return on investment. A diligent investor will consider […]

Real Estate Returns: Cap Rate vs. Return on Cost

Commercial Real Estate Investment Return Metrics: Cap Rate vs. Return on Cost

Whether they focus on commercial or residential property, every real estate investor has their own set of requirements that they use to determine whether or not an investment property is worth purchasing. In commercial real estate investment, there are two widely used methods of measuring returns on a real estate investment.  One is the Capitalization […]

Understanding the Capitalization Rate

Commercial real estate properties, even those within the same asset class, come in all shapes and sizes.  They have different locations, unit mixes, rental prices, finishes, conditions, and lease expirations all of which can make it difficult for real estate investors to create a true “apples to apples” comparison when evaluating investment options.  To solve […]