Commercial Investment Property Articles

The Dirty Three Letter Word Of Commercial Real Estate Investors...

Darin Garman, CCIM
Copyright 2006 All Rights Reserved

A big mistake a lot of people make when it comes to investing in commercial investment property is that they forget one simple thing:

Its All About The Net (Not Gross)!

Not complicated math either. It really comes down to rents less expenses. This and this alone determines the values of our investment properties. At least 95% of the time.

Then, add loan principal reduction AND appreciation as icing on the cake of commercial property. There is also cash flow too. But it is the NET!

That is Garman Math 101.

Should be your Math too.

Always keep in mind that it is not about the pretty color of the building, not about whether the building has garages or balconies or a TV room or new maintenance free siding.....

Its all about the numbers baby!!

So, your first job in examining a potential "deal" needs to be the numbers. Whether they have a swimming pool is insignificant - it the numbers. Its the NET!

You see, the sad thing is when an owner plows thousands of dollars in improvements into a property and thinks he will get his costs right back. No way. I see this happen all the time. Why? New siding did not increase his net income. It made the property look better but his cash flow is still the same.

Numbers, numbers, numbers...

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Copyright 2006 Darin Garman, CCIM, All Rights Reserved.
Apartment and Commercial Investment Property Specialist