What investors should know about commercial real estate and cap rate

For those who are investing in commercial real estate or want to invest in commercial properties, it is important to focus on the capitalization rate, or cap rate. The cap rate is the ratio of the rental income that is made each year over the cost of the purchase price of the commercial real estate.

If the cap rate is higher than the income that is brought in from renting out the property, the the commercial property brings in more and a smaller amount of down payment is required. Capitalization rate is often focused on to help determine properties that bring in a small rental income.

Yet other commercial real estate investors want real estate where the cap rate is higher than the loan’s interest rate as they focus on getting more in rental income than what they have to pay on the mortgage.

Having stated this, is a high cap rate the best way to determine the best property to invest in? The answer is a definite no. Cap rate is just one factor to consider amongst many factors and it should not be the only factor.

Advertisements

About Stephane Manos

Stephane Manos has developed several online companies. While working as an online entrepreneur, he fell in love with the sales aspect and recruited some of the best clients and affiliates the companies have ever had. The fun, he found was in building the connections and relationships. One of Stephane's top qualities is being able to motivate. He found a passion in motivating others which in return motivated him. Happy colleagues and clients would send word-of-mouth referrals and increase traffic to his online businesses. Teamwork is something that Stephane promotes. The focus is not on self or individuals but in working as a team to reach the same goals. It is his role as a leader to lead the team by example. Currently, his interest is in real estate investments and financial investments. He is now looking into emerging markets such as the Middle East. He also believes some of the better deals can be found in certain parts of the United States. Many distressed buyers are looking to liquidate. Developing new online businesses, purchasing commercial and residential real estate, and developing rentals has led him to travel around the world. Stephane Manos contributes a portion of his time and earnings to charitable associations and philanthropic groups. His charities are: -Children's Telethon -AHEPA brotherhood and Shriners -REVIVRE Bipolar Support Assocation
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s