Commercial Real Estate Investment AnalysisReal Estate Influence
July 6, 2012 — 1,038 views
Commercial real estate investment is powered by knowledge. By understanding the common techniques used when analyzing commercial real estate, you can invest in property with less risk and expand your contracts among commercial property professionals.
Real estate investment analysis involves analyzing the impact of leverage. Leverage is the use of financial instruments or borrowed money to increase the return of an investment. This can work for you by using your own money or using some of your partner's money to finance the investment.
However, an unstable real estate market can place you at risk of declining profits. This is why analyzing the impact of leverage is imperative when investing in commercial real estate. Using a financial calculator can help determine risk and solve problems in commercial real estate investment.
You should know that investing in commercial property is different than residential property in terms of cash flow. There is typically a bigger cash flow with commercial property than individual homes as property leases are longer. Finally, Investopedia suggests evaluating commercial property by going to open houses in the neighborhood. You can learn more about the area and property by talking to other commercial real estate owners.