2 However we will briefly examine the general concept of tax deferral. If the owner exchanges his property for a qualifying like-kind property and complies with the rules of Section 1031, the entire tax may be deferred.

There are three general methods appraisers use to value commercial real estate:

Cost Approach 2. Sales Comparable Approach 3. Income Capitalization Approach

The Cost Approach arrives at a value by determining what it would cost to replace the property being assessed.

The Sales Comparable Approach analyzes recent sales on comparable properties and makes assumptions based on the sale price per foot and then applies that sale price per foot to the subject property in order to arrive at a current market value. The Income Capitalization Approach analyzes the income and expenses generated and incurred on the property and then capitalizes the Net Operating Income (cash flow before debt service) in order to arrive at a current market value. (This assumes of course the property does in fact generate income. Some borrowers feel that the appraised value should be the value underwritten by the lender.

Cap Rate Net Operating Income / Value (or Purchase Price) A cap rate is merely an expression of the unleveraged annual return on one's investment.

Value Net Operating Income / Cap Rate (input)

Commercial property is often used as a source of profit for investors. If you are interested in buying commercial real estate, it is important to determine how much the property is worth in terms of market value.

Commercial Foreclosures - Guide for Investors

Financing Purchase Transactions

First of all, financing purchase transactions for owner occupant (meaning for your business) type loan requests is viable, and much more so than other types of commercial mortgages.

Please keep in mind that other commercial mortgage programs, such a conventional, investor, etc remain difficult. Property values have dropped substantially and 2. Loan to value requirement have also dropped substantially. After the Commercial Mortgage Backed Securities (CMBS) market, for conventional investor deals is fixed, money via Wall Street will rush back into the market allowing for eased underwriting standards and more aggressive funding for all loan requests. In turn, property values will increase.

Now Is The Best Time to Purchase Commercial Real Estate In Decades

Buying commercial foreclosures can make any investor a boat load of money. Any place where business can be conduction is considered a commercial foreclosure.At this point you may be thinking about how investors make money with commercial foreclosures. The real money begins to come in when an investor has a commercial property paid off. No matter what your situation, if you are an investor you should give commercial foreclosures a strong consideration.

Commercial Brokers Price Opinion Form - Even Hard Capital Commercial Mortgage Lenders Have Tightened Lending Standards

Financing Purchase Transactions

First of all, financing purchase transactions for owner occupant (meaning for your business) type loan requests is viable, and much more so than other types of commercial mortgages.

Please keep in mind that other commercial mortgage programs, such a conventional, investor, etc remain difficult. Property values have dropped substantially and 2. Loan to value requirement have also dropped substantially.

Property Values at Historic Lows

After the Commercial Mortgage Backed Securities (CMBS) market, for conventional investor deals is fixed, money via Wall Street will rush back into the market allowing for eased underwriting standards and more aggressive funding for all loan requests. In turn, property values will increase.

Now Is The Best Time to Purchase Commercial Real Estate In Decades

Commercial Brokers Price Opinion Form

Cash

Virtually all lenders, private and conventional, have stopped originating 100% financing.

10% hard equity (cash down or cash previously contributed) is what most commercial hard money people consider reasonable. For loans against quality commercial property, hard money professionals will usually lend up-to 50% of the value of land, 60% on vacant buildings or buildings with insufficient cash flow and 65% on income producing commercial buildings such as multi-family, office or retail.

Experience

First time investors scare loan officers.

Exit

Private loans are short term loans, generally 6-36 month, rarely more. Hard money lenders are not lend-to-own lenders; they don't want to take back your property. Investment and loan standards have tightened up across the entire commercial real estate finance industry.

Understanding The Varieties Of Equity Capital Involved In A Commercial Real Estate Transaction

2 However we will briefly examine the general concept of tax deferral. Assume a sale nets the owner $100,000, creating a tax liability of $20,000. Cost Approach 2. Sales Comparable Approach 3. Income Capitalization Approach

The Income Capitalization Approach analyzes the income and expenses generated and incurred on the property and then capitalizes the Net Operating Income (cash flow before debt service) in order to arrive at a current market value. Some borrowers feel that the appraised value should be the value underwritten by the lender.

Cap Rate Net Operating Income / Value (or Purchase Price) A cap rate is merely an expression of the unleveraged annual return on one's investment.

Value Net Operating Income / Cap Rate (input)

Sponsor Equity: This is the cash investment contributed by owners of a project.Preferred Equity: Preferred equity is similar in structure to a mezzanine loan; however, many of the complexities involving mezzanine debt are avoided. Institutional Joint Venture Equity: Institutional investors have a strong appetite for joint ventures with experienced owner-operators or developers. In many instances, institutional equity partners seek to limit overall property leverage to between 50% and 60%, thus lowering the internal rate of return to the sponsor.Institutional joint venture equity transactions generally are structured so that the institutional investor contributes between 80 percent and 90 percent of the required equity, with the sponsor investing the remainder. Sponsor Equity2. Preferred Equity3. Mezzanine Debt4. Senior Debt