Category: CommLoan Academy

The operating expense ratio, sometimes called expense ratio or OER, is an important factor for all commercial real estate investors and property owners. It is a metric that compares the amount of income that a commercial property generates to the amount of money it costs to operate that property.

Why Does Operating Expense Ratio Matter?

The operating expense ratio helps show the cost to operate … Read More

Any potential lender or investor needs to utilize commercial rent roll in the evaluation of any property. It provides insight into if the property is a good risk or not.

That is why commercial property rent roll tends to be one of the first things investors ask for when considering the investment into the property. It contains a significant amount of information about the tenants … Read More

Understanding the floor area ratio is important for commercial real estate investors. The metric is specifically important for developers looking to make the most use out of the property their commercial building will occupy. Here are some insights into what FAR is, how the floor area ratio formula works, how  and when it is used.

What Is Floor Area Ratio (FAR)?

The floor area ratio, … Read More

An assumable loan is a type of loan that the new purchaser of the property can take over. Assumable loans are designed to allow the buyer of the commercial property to take over the loan held by the existing property owner when the property is sold.

There are numerous situations where it is essential to know if a loan is assumable and whether or not … Read More

Earnest money isn’t absolutely required in commercial property deals, but it’s a common feature of most agreements. Here’s a look at earnest money: what it is, how to negotiate it, and whether it’s refundable.

What is Earnest Money?

Earnest money is a deposit that the buyer of a commercial real estate property gives (indirectly) to the seller. The purpose of the deposit is to demonstrate … Read More

Many multifamily investors and developers must follow specific rules when it comes to utilizing the land they or projects they build when they are using Low Income Housing Tax Credits (LIHTCs) to pay for the cost of these projects. One of the specific rules that apply to LIHTCs is the requirement to meet rent limits for a period of time. Other restrictions also apply.

All … Read More

Owning commercial real estate comes with tax, financial and other benefits. Many businesses across industries choose to purchase owner-occupied commercial real estate, so they can realize these diverse benefits. Here’s a look at what owner-occupied commercial real estate is.

What Does Owner-Occupied Commercial Real Estate Mean?

Owner-occupied commercial real estate is property that’s both owned and used by the same business. The business usually needs … Read More

Rent is obviously the amount tenants pay for their leased spaces, but it can be calculated in a couple of different ways. Net effective rent calculates the amount that leases generate on an average monthly basis. Landlords may strategically use net effective rent in their listings and marketing, and they should know it even if they don’t advertise rent this way.

What Does Net Effective … Read More

Vacancy rates are a big factor when it comes to selecting an investment property. It provides information on how many properties are vacant and for how long, but it can also shed light on how well the property is being managed.

If purchasing investment property, understanding the property’s vacancy rate may provide insight into the desirability of the property, especially when compared to other area … Read More

Commercial cash-out refinances grant property investors access to the equity that would likely otherwise be illiquid. Selling and cash-out refinancing are two main ways to realize equity and reallocate capital, and refinancing has several advantages.

What Exactly is a Commercial Cash-Out Refinance?

A commercial cash-out refinance is a process in which property is refinanced, and equity is withdrawn; hence the term “cash-out refinance.”

The property … Read More