4. Familiarize Yourself With Key Commercial Real Estate Metrics
The general key metrics for property valuation include (Part 2):
- Cap Rate
The "cap" - or capitalization rate - of a real estate property is used to calculate the value of income-generating property. For example, a residential complex with five or more residential units, commercial office buildings and smaller shopping centers are good candidates for determining the upper limit. Cap rates are used to estimate the present value of future profits or cash flows. The process is also known as profit capitalization.
- Cash on Cash
It is sometimes referred to as the return on a property investment. The cash-on-cash return offers business owners and Agen Poker investors an analysis of the business plan for a property and the potential cash distribution over the term of the investment.
Investors of commercial real estate who rely on finance to purchase their properties often use the cash-on-cash formula to compare the performance of competing properties in the first year. According to Agen Poker Terpercaya, cash-on-cash takes into account the fact that the investor in question does not need 100% cash to buy the property (long-term borrowing), but also the fact that the investor will not keep everything NOI because he or she has a part of which must be used for mortgage payments. To get cash, real estate investors need to determine the amount required to buy the property or make their initial investment.
Calculations based on the standard ROI take into account the total return on an investment. The cash-on-cash return, on the other hand, only measures the return on the money actually invested and provides a more precise analysis of the performance of the investment.
Read More : 7 Steps of A Commercial Real Estate Deal Part 1
5. Look for Motivated Sellers
Like any company, customers drive real estate. Your job is to find them - especially those who are willing and eager to sell below market value. The fact is that nothing happens or matters in real estate until you find a store that is usually accompanied by a motivated seller. This is someone with an urgent reason to sell below market value. If your seller is not motivated, he or she is not ready to negotiate.
6. Discover the Art of Neighborhood "Farming"
An excellent way to evaluate a commercial property is to examine the neighborhood it is in by opening houses, talking to other owners of the neighborhood, and looking for vacancies.
Use a three-step approach to assess the properties
Be adaptable when looking for cheap deals. Use the internet, read the classified ads and rent bird dogs to find the best property for you. Real estate bird dogs can help you find valuable investment leads for a transfer fee.
7. The Bottom Line
On the whole, finding and valuing commercial property is not just about managing neighborhoods, getting a cheap price, or sending smoke signals to get sellers to you. Basic human communication is at the center of action. It's about building relationships and building relationships with the owners so that they feel comfortable talking about the good Agen Poker Online business - and doing business with you.
Tags : Commercial, Real Estate, Properties, Deal, Steps