David Luke

Rational investors are seeking to grow their assets over time, and assessing the time value of money is an essential step when evaluating different investment opportunities. Net present value (NPV) allows investors to include the time value of money in property valuations. It’s a must-know number when evaluating a commercial real estate property or portfolio.

What is Net Present Value (NPV)?

Net present value is … Read More

A cross-collateral loan could be an option for investors who own assets and want to extend their portfolio. Yet, like most opportunities, there are some risks to understanding this process. For those who have collateral, it is worth taking a closer look at how cross-collateral loans could help provide an opportunity to invest at a lower cost.

What Is Cross Collateralization in Commercial Real Estate? … Read More

Investors considering the purchase of a real estate for rental purposes must determine the estimated value of that property. One component of that process is to evaluate the potential income a property can offer. This is where the gross potential rent formula is helpful.

What is Gross Potential Rent?

Gross potential rent is a metric that investors use to determine the amount of expected income … Read More

Commercial property investors need to offer potential tenants attractive terms, or else risk having the best tenants sign leases elsewhere. Rental concessions are one common way to entice tenants with more attractive terms. Here’s a look at what lease concessions are, their advantages and disadvantages, and when you might use them.

What is a Rent Concession?

A rental concession is a temporary or permanent modification … Read More

A partially amortizing loan is not an uncommon tool for commercial real estate investors because of the benefits it offers. All loans amortize in some way, no matter if they are commercial loans or not. There are two main options: fully amortizing and partially amortizing. Understanding the difference helps ensure investors make the best decisions about their specific needs.

What Is Amortization on a Commercial … Read More

Commercial ground rent is an important concept for property owners. When it comes to ownership ground rent situations vary somewhat, but their ultimate premise remains the same.

In these situations, the property owner owns the land but not necessarily the building on that land. The owner charges a fee for the use of the land. Here is what you need to know about these rents, … Read More

The operating expense ratio, sometimes called expense ratio or OER, is an important factor for all commercial real estate investors and property owners. It is a metric that compares the amount of income that a commercial property generates to the amount of money it costs to operate that property.

Why Does Operating Expense Ratio Matter?

The operating expense ratio helps show the cost to operate … Read More

Any potential lender or investor needs to utilize commercial rent roll in the evaluation of any property. It provides insight into if the property is a good risk or not.

That is why commercial property rent roll tends to be one of the first things investors ask for when considering the investment into the property. It contains a significant amount of information about the tenants … Read More

Understanding the floor area ratio is important for commercial real estate investors. The metric is specifically important for developers looking to make the most use out of the property their commercial building will occupy. Here are some insights into what FAR is, how the floor area ratio formula works, how  and when it is used.

What Is Floor Area Ratio (FAR)?

The floor area ratio, … Read More

An assumable loan is a type of loan that the new purchaser of the property can take over. Assumable loans are designed to allow the buyer of the commercial property to take over the loan held by the existing property owner when the property is sold.

There are numerous situations where it is essential to know if a loan is assumable and whether or not … Read More