Commercial Real Estate is far different from Residential Real Estate.  DO NOT use a residential agent to serve you in your commercial needs. 

We offer commercial real estate products and services catering primarily to local businesses and investors.  We have the experience and a network of over 220,000 contacts in multiple databases to serve businesses and investors locally, and to take investors across the country to help them make money in the most profitable areas.

Here's a Quick Reference on Common Real Estate Calculations

Capitalization Rate: 1st Year Net Operating Income Divided by the Purchase Price

This calculation is somewhat useful, but mostly you need to understand how people calculate it, because it's widely used in real estate investing.  The biggest mistakes most people make when giving you a "supposed cap rate" are failure to properly calculate the following: New taxes, new insurance, and leaving out management costs, because they don't count the cost of their own time if they aren't paying a management company. 

There are also normally mistakes made in calculating maintenance costs.  Look to see if the maintenance schedule and expenses are proactive or reactive.  The main problem with this calculation is that it doesn't account for debt-service.

If You Are Currently a Tenant, You Should Cick Here & Read How Your Landlord Can Capitalize on Every Dollar You Spend by 700% to 1900%.  This Link will show you how much value you have!

Gross Rent Multiplier: Purchase Price Divided by 1st Year Forecast of Potential Rental Income

This calculation is basically useless.  It's simply a way to gauge if a property is even bringing enough rent to begin with, but without understanding the expenses you have very little information.  The reason it's posted here is because some people insist on using it, and it's so easy to understand you don't want to get caught not knowing it.

Cash-on-Cash Return: 1st Year Cash Flow Before Taxes Divided by the Amount You Initially Invest

This is a great calculation, and takes into consideration all costs, including debt-service.  It simply tells you how much cash out yearly you get for your initial cash in.

Internal Rate of Return: The Earned Percentage Rate on Every Dollar Invested for Every Period Invested

The Internal Rate of Return or IRR calculation put simply measures the average annual yield on an investment.  For an income producing property, the internal rate of return or IRR calculation uses the initial amount invested in the property, a series of projected cash flows which are usually after taxes, and a projected After-Tax Sales Proceeds amount in a given year.

Loan-to-Value Ratio: The loan-to-value or LTV is a ratio between the outstanding balance of all loans on a property and the appraised value of a property and is expressed as a percentage.

More Useful Commercial Real Estate Information

Real Estate Leverage is the use of borrowed money to increase your profits in an investment.  Building wealth via real estate requires the use of leverage.  Let's assume you have $100,000 to invest and you purchase a small income property for $100,000.  Income properties have been appreciating at an average of 7% per year.  At the end of the first year of operation, your property is worth $107,000.  At the end of year two, it is worth $114,490.  Now let's assume that you put your $100,000 down on a $500,000 income property.  At the end of the first year, it is worth $535,000.  At the end of the second year, it is worth $572,450.  By using leverage or borrowed money to purchase a larger income property, you have increased your profit by $57,960 in just two years

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