Here’s what you should know about construction loans before applying for one
For many people, a construction loan is key to owning their dream home. When financing the purchase of a home already on the market, you can depend on a mortgage to help with the costs. But what happens when you need to pay for a home that only exists in your dreams? That’s where construction loans come in. Below, ACOM Capital Select breaks […]
Big banks are more at risk of a commercial real estate meltdown than people think, new study says
Big lenders are more exposed to commercial real estate than it might seem at first glance, a study says. In addition to lending to property owners, big firms also offer indirect lending to REITs, raising their exposure by about 40%. Wall Street has been worried about distress in commercial real estate amid high interest rates. […]
Real Estate Pro-Forma for Hotels
The Pro-Forma for a hotel is quite different and much more like the Income Statement of a normal company, with Revenue split into Rooms and Food & Beverage and Expenses split into Fixed vs. Variable categories. Sales & Marketing and G&A may be much bigger, there will be management compensation and bonuses, and NOI margins […]
What is a BRIDGE LOAN?
Bridge Loan Definition What is a Bridge Loan? A bridge loan is a short-term loan used to purchase assets or cover immediate costs until long-term financing can be secured. Bridge loans are commonly used by homebuyers to purchase a new property prior to the sale of their current one. REtipster does not provide tax, investment, […]
Differences in the Real Estate Pro Forma for a Multifamily Property
In this tutorial, we’ve focused on a real estate pro forma for a mixed office/retail property. This same pro forma also applies to industrial properties because lease terms, revenue, and expenses are similar. However, there would be some minor differences for a multifamily property (i.e., an apartment building where tenants rent units) because: Tenants are often responsible for Utilities, […]
What are “Operating Expenses” in Commercial Real Estate?
Common operating expenses include property management fees, utilities, maintenance, insurance, sales & marketing, general & administrative, property taxes, and reserves. Some are projected based on a % of Effective Gross Income, some are based on $ per square foot or $ per square meter figures, and some are percentages of the property’s value. Property Management […]
How to Calculate CAP Rate for Commercial Real Estate Properties
Calculating the capitalization rate (cap rate) for commercial real estate properties is a fundamental analysis tool used to assess the potential return on an investment. The cap rate is a measure of the relationship between a property’s net operating income (NOI) and its current market value or acquisition cost. Here’s a step-by-step guide on how […]
What is The Debt Yield? Why is it important in Commercial Lending?
The debt yield is becoming an increasingly important ratio in commercial real estate lending. Traditionally, lenders have used the loan to value ratio and the debt service coverage ratio to underwrite a commercial real estate loan. Now, the debt yield is used by some lenders as an additional underwriting ratio. However, since it’s not widely used […]
What is Cost Segregation? What’s the benefit to Real Estate Investors?
Cost segregation on rental properties has been a powerful strategy used by real estate investors to grow their wealth for decades. This is evident when looking at the tax returns of real estate investors who pay very little to no tax despite their tremendous wealth. As a result, many people think that this tax-deferring strategy […]
