How to Determine the Cap Rate in Commercial Real Estate

Commercial property

If you are new to the process of buying commercial property, you’ll want to know a property’s cap rate (short for capitalization rate) before purchasing it. Simply put, this metric will let you know ahead of time the potential of a real estate investment. This article will help you understand exactly how a cap rate works, how to calculate it, and when it’s indicating a property can serve as a good investment.

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Are Commercial Real Estate Loans Nonrecourse?

commercial real estate building

Your business is booming and you are looking to move your business into a newer, larger space. Maybe you are a commercial real estate investor looking to purchase property. Regardless of the reason why you are purchasing commercial real estate, you may need to secure financing for the purchase.

Most loans require you to put up collateral to back the loan against default. Should you default, the lender can go after you, personally, for any outstanding debt on the loan. These “traditional” loans are called recourse loans. However, did you know there are non-recourse loans that protect your personal finances are available for your commercial real estate purchase?

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What Financials Are Needed for a Commercial Lease?

commercial buildings in a business park

There are several issues a new or existing business owner will need to tackle when considering a commercial real estate lease: Do I have the money to cover the length of the lease? What happens if my business isn’t as successful as I imagined? How far back would the landlord want to see my financials to determine if I am a good or bad risk? Will I need a lawyer or accountant to secure my new lease?

A business owner will want to carefully consider these factors and others before signing on the dotted line. Whether the lease involves a warehouse, retail space, or a simple office, landlords will want to see some specific financial and credit-history information about you and your business before cashing your check. This applies to both existing businesses and startups, because as in the case of any rental or lease (whether commercial or personal) the landlord wants to know if you can pay the rent.

It will benefit you greatly to present your financial situation in the best possible light in order to have a better negotiating position from which to work.

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Is Industrial Property a Good Investment?

Trucks unloading in an industrial property

Thinking about expanding your portfolio to include industrial property? In Las Vegas, the sector is growing for the first time since the 2008 financial crisis, with around ten million square feet of space added since 2017 (according to Nevada Business Magazine), and demand continues to grow. In 2018, the industrial real estate sales hit a whopping 16 billion dollars in sales nationwide. The smart, savvy investors will take the time to figure out if they too can be a part of this lucrative industry.

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Why Is It Difficult to Find Industrial Property in Las Vegas?

industrial property

Due to the increase in online shopping behavior, shipping and fulfillment is in greater demand in addition to the myriad other uses for warehouses. With this in mind, industrial property seems to be a targeted investment for many investment groups.

Unfortunately, the availability of industrial property does not meet the demand, making it difficult for investors to find vacant properties to lease as well as for companies to acquire industrial buildings for investment.

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What Are the Opportunity Zones in Nevada?

low income high rise

Someone looking to invest in commercial real estate may be concerned with the tax implications of making such an investment. Are there areas where investments can be made and taxes will not cause more financial loss than gain? And if the investor is socially conscious, is there a way to invest that could help revitalize disadvantaged areas of their local community? Qualified Opportunity Zones (QOZs) can help investors with both of these questions.

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What is the Foreign Trade Zone in Clark County?

foreign trade zone warehouse

The majority of company owners are in business to make money. If they can find ways to save on the costs related to their company or their property, they will be able to increase their earnings and their cash flow. One of the more under-utilized cost-saving methods available in Clark County is the Foreign Trade Zone (FTZ). If your business buys commercial property or sets up shop within the FTZ, you can achieve some pretty sizable cost savings and other benefits by taking advantage of this program.

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What Are the Different Types of Commercial Leases?

Shopping center for lease

Your company is growing and you are hiring a lot of new employees. This is great news! You are ready to expand your office space to accommodate all of the new hires and your office equipment. However, when you start to look at the office space available in your area, you are inundated with all of the different types of commercial leases available. What are all of these leases? What do the different types encompass? What would be the best type of lease for you and your company? Don’t get overwhelmed. A little reading will help you understand the various commercial leases you can choose from and explain which one might be the best for your needs.

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How Do You Value Commercial Real Estate?

How Do You Value Commercial Real Estate?

Commercial real estate comes in a wide variety of options, from standalone buildings to multi-story office complexes. Some buildings are purpose-built for a single use while others are ready platforms for a wide array of businesses. In addition, properties in some locations can be more profitable than others. Given all of these factors, how can you determine a good price for a piece of commercial real estate?

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