What Are The Tax Benefits of Commercial Real Estate Investment?
When discussing the benefits of commercial real estate investing, many are quick to cite the cash flow generated by rental property leases or the capital appreciation driven by the supply and demand characteristics of a given market or improving Net Operating Income. While these are important benefits and material components of the total return, they […]
Understanding the Triple Net Lease Structure
One thing that nearly all commercial real estate properties have in common is tenants with leases. These leases, and the contractually mandated income that they produce, are the lifeblood of a commercial asset. But, the structure for each individual lease can vary by tenant and property type so it is critically important to understand the […]
What is a Cap Rate in Commercial Real Estate?
There is a common saying in real estate investing circles that states “something is only worth what someone is willing to pay for it.” One of the most common ways real estate investors determine what a property is worth is by using a multi-purpose metric known as the Capitalization Rate or “cap rate” for short. […]
What is the Debt Service Coverage Ratio?
Nearly all commercial real estate transactions are financed with some combination of debt and equity. The equity comes from the potential property owner and/or their investors while the debt comes from a bank or non-bank lender. The exact amount of each can vary by transaction, but equity typically consists of 15% – 25% of the […]
Understanding Management Intensity
Fundamentally, the principles of commercial real estate investment are fairly simple, an individual or company purchases an investment property, like an office building or retail property, and leases the space in it to other individuals or companies for a rental fee. As long as those fees are more than it costs to operate the property, […]
Cap Rates in Commercial Real Estate: Formula & Explanation
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. The proforma, which includes allocations for income and expenses, serves as the basis for calculating the property’s potential return on investment. A diligent real estate investor […]
