KLRT Commercial Real Estate
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Are You Considering Purchasing a Commercial Investment Property?

-- You will need to be aware of a few things to collect in order to properly analyze the investment.

These can be collected from either the Building owner if privately listed, or the listing Realtor if applicable.

***Income
- Base Rental/Lease Income
- Misc Income - Sign rentals, storage rental etc.

***Expenses
- Property Tax
- Insurance
- Property Maintenance
- Condo Fees

-- With the above information, you will be in a position to properly analyze the value of a building by applying vacancy rates, repairs and maintenance allowance and finally a cap rate to help determine your ROI.

* We will cover a specific example on the next installment.

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Do You Know How to Apply the Numbers to Ensure You Make a Smart Business Decision?

-- In this video we have a look at how we can apply mathematics to commercial building rent in order to determine an adequate purchase price as an investment.

-- If we need a cap rate (or return on investment) of 7.5%, with a net operating income of \$17,000/year, we can calculate the value of the building as follows;

* NOI (\$17,000) divided by .075 = \$226,666 Value

-- Alternatively, if we have the same Net Operating Income of \$17,000, along with an asking price for the building off \$250,000, what is the Cap Rate?

* NOI (\$17,000) divided by the asking price of \$250,000 = 6.8% Cap Rate

A variety of factors go into placing a value on a commercial investment property, however the above provides you the basic know how in order to get a very basic idea of value.