When you’re searching through commercial real estate listings, you’ll likely see the term, cap rate (short for capitalization rate), highlighted in each post. A cap rate is one of the most common valuation metrics used in CRE. Before you dive into investing, it’s important to understand the definition of a cap rate and how this term is used in CRE. ...
This piece by Ben Lapidus was originally published on Spartan Investments. Today, you can’t turn on the news without hearing speculation about a recession. What would it mean for our economy? Has the definition changed? As a commercial real estate investor, you’re likely considering how shifts in the market may impact your bottom line. You may also be wondering how ...
Before sinking their hard-earned money into any company, savvy investors want to ensure their funds will generate returns. For every dollar spent, investors expect an additional level of earnings in the future. However, producing these sureties can be challenging. That’s why many investors use different metrics to analyze business performance, including operating margins, net operating income and payout ratios. But ...
This piece by Rob Beardsley was originally published on Lone Star Capital. A growing number of retirement savers are becoming aware that they can choose investments other than the traditional offerings of stocks, bonds, mutual funds, ETFs and CDs within an Individual Retirement Account (IRA). Self-directed IRAs offering non-traditional investments have increased in popularity in recent years and are somewhat ...
When embarking on a commercial construction project, you’ll find that your costs are divided into two distinct categories: hard costs and soft costs. What Are Hard Costs vs Soft Costs? Hard costs in commercial real estate are directly related to the physical construction of the building. They’re tangible expenses Soft costs are more intangible and are not directly related to ...
When you’re researching a commercial real estate property as a potential investment, there are many factors to consider. Cash on cash return tells you how much you’re making on a rental property after expenses on an annual basis. It’s a common metric commercial real estate professionals use to evaluate a CRE deal. This article explains how to calculate cash on ...
For years, banks around the world have been using one specific type of interest rate calculation known as LIBOR to determine their short-term loans from bank to bank. However, a change is currently underway, with a shift to a different benchmark known as SOFR. Here’s what you need to know about the LIBOR to SOFR transition and its impact on ...
Loan-to-cost (LTC) is a common metric in commercial real estate. Lenders use the loan-to-cost ratio to evaluate how much debt they will lend on a value-add or construction real estate project relative to its total cost. It’s one of the main metrics CRE lenders use to determine how much risk they will take on for a given CRE project. Read ...
No matter how prepared an investor can be before buying into a market, there is always a chance of bad luck — or bad timing. There is no guarantee the planets will align themselves to ensure every penny spent is earned back within the expected timeframe, and investors who decide to go with a floating rate are especially at risk. ...
In commercial real estate financing, leverage is the result of using borrowed money to fund your investment and generate higher returns on that investment. Leverage is essentially an investment strategy through the use of borrowed money. Commercial real estate investors use leverage to increase their ability to purchase property. A leverage ratio, therefore, is a way to calculate how that ...
Lev is using technology to transform the CRE financing process.
Lev is using technology to transform the CRE financing process.