Financial Analysis For Commercial Investment Real Estate

Date:

Courses Held Locally By St Louis Ccim Chapter

CI 101 Financial Analysis for Commercial Investment Real Estate

Registration is with CCIM Institute through their website. If you have questions about the registration process, please contact CCIM Institute at 321-4460.Institute Member is defined as a member that pays dues to the National Institute. To learn more about becoming a member of CCIM Institute, click HERE.Pricing is established by CCIM Institute.

Commercial Real Estate Negotiations | REGISTER HERECorporate Hill1630 Des Peres Rd. First Floor Training RoomSt. Louis, MO 63131This course qualifies for six hours of Missouri CE elective credit.Course Instructor: Patricia Lynn, CCIM

CI 104: Investment Analysis for Commercial Investment Real Estate | REGISTER HERE Corporate Hill1630 Des Peres Rd. First Floor Training RoomSt. Louis, MO 63131Course Pricing: Institute Member: $1,435 | Non-member $1,735This course qualifies for nine hours of Missouri CE elective credit.Course Instructor: Patricia Lynn, CCIM

CI 101: Financial Analysis for Commercial Investment Real Estate | REGISTER HERE Corporate Hill1630 Des Peres Rd. First Floor Training RoomSt. Louis, MO 63131Course Pricing: Institute Member: $1,200 | REALTORĀ®: $1,460 | Non-member $1,735This course qualifies for nine hours of Missouri CE elective credit.Course Instructor: Jim Rosen, CCIM

Scholarship opportunities are available. Learn more HERE.

Example Considerations When Building Great Real Estate Spreadsheets

Lt u look at a residential mult-unt fixing-u renovation project as a concrete xml. The property h fv ndminium spaces and w developed 40 r ago. Today it has three tnnt leading to an occupancy rate of 60%. The condos are in dire need of nw ntrr refreshes, frh ntings on the outside of the building, some plumbing nd utility wrks t bring the buildings up to urrnt hlth, ft and fire security standards. Also, there is a roof leakage and water damage.

For such a project, we require a good understanding of the required capital expenses , We first create a separate rl tt spreadsheet which sums up all the CAPEX required for the renovation works. Keep the spreadsheet flexible so that you can later change the CAPEX budget if you need to change the amounts to keep your building renovation project profitable.

The CAPEX budget in your real estate spreadsheet huld incorporates the vrng, lrng, water ln, wrng, gardening, and any other costs. Such CAPEX items will result in a one-time expense which normally will be incurred upon purchase or shortly after -with the goal to improve the properties and afterward, rent them at higher rental rates. This approach if it can be done is maximizing returns of the investor.

Revenues minus all operating expenses will result in the Net Operating Income. By deducting CAPEX we arrive at the unlevered cash flows before taxes.

Roadblocks To Real Estate Valuation

Both of these real estate valuation methods seem relatively simple. However, in practice, determining the value of an income-generating property with these calculations is fairly complicated. First of all, it may be time-consuming and challenging to obtain the required information regarding all of the formula inputs, such as net operating income, the premiums included in the capitalization rate, and comparable sales data.

Secondly, these valuation models do not properly factor in possible major changes in the real estate market, such as a or a real estate boom. As a result, further analysis must be conducted to forecast and factor in the possible impact of changing economic variables.

Because the property markets are less liquid and transparent than the stock market, sometimes it is difficult to obtain the necessary information to make a fully informed investment decision.

That said, due to the large capital investment typically required to purchase a large development, this complicated analysis can produce a large payoff if it leads to the discovery of an undervalued property . Thus, taking the time to research the required inputs is well worth the time and energy.

Recommended Reading: Invest In Your Woman Quotes

Internal Rate Of Return

The last important metric to understand when building a real estate investment analysis spreadsheet is the internal rate of return . In order to do this, the investor will need to take a view on how long he plans to be invested in the property. The IRR is calculated based on a cash-in/cash-out consideration for the next year and focuses on the levered cash flow after taxes for investors with required all-in acquisition costs at the beginning and the exit proceeds from selling the property later on.

In many cases, analyzing the IRR can be very helpful as the IRR can also be easily compared to the expected returns of other investment alternatives or asset classes other than real estate. However, also to mention there are also cases where IRR analysis only works if the cash flow patterns do not have too many changes with minus and plus among some other limitations.

In that case, one better focuses on the cash on cash yields. IRR analysis is another way of calculating whether property investment is profitable or not especially for real estate development projects.

Ci : Financial Analysis For Commercial Investment Real Estate

Explore Our Image of Commercial Real Estate Budget ...

CI 101 is a bedrock class for real estate practitioners at a time when risk mitigation, pricing, and cycle assurance have become critical to investors. CI 101 introduces the CCIM Cash Flow Model, a tool for ensuring your investment decisions are based on wise finance fundamentals. During the course, you will learn how to use key financial concepts such as Internal Rate of Return , Net Present Value , Cap Rate, Capital Accumulation, and the Annual Growth Rate of Capital to compare different types of commercial real estate investments.

This course will teach you how to:

  • Make informed investment decisions using the CCIM Cash Flow Model
  • Measure the impact of federal taxation and financial leverage on the cash flow from the acquisition, ownership, and disposition phases of real estate investment and
  • Use real estate analysis tools to quantify investment return.
  • There are no upcoming events.

For this course, and others, being offered by the CCIM Institute, please check: ccim.com/education/courses

Special Thanks to our Annual Corporate Chapter Partners

Don’t Miss: Stated Income Investment Property Loans

Property Fixer Real Estate Investment Calculator

Price: Free | Team: iMLS LLC | Platform: AppleVisit WebpageTag Line: The ultimate tool for real estate investors who are flipping properties

Designed for real estate investors who flip properties, Property Fixer allows you to analyze a property in 5 minutes entering some basic information about the property generates an analysis showing profit and ROI for a flip. Allowing you to quickly crunch numbers and conduct due diligence on a property, this app can help investors make a quick decision on a property, or allow an agent to generate and email a flip analysis for their clients, without having to go back to the office.

The Importance Of Valuation In Real Estate

One famous saying in real estate is You make the money when you buy. This means that the profit is defined at the time of purchase and not at the time of selling. The consequence is that valuation in real estate becomes key and thats why for every project a solid real estate spreadsheet is needed.

While determining the purchase price of a property in real estate property is one of the most useful applications, valuation in real estate is also very important for other reasons such as obtaining bank financing, negotiating property insurance or figuring out the resell value. Though some people often misunderstand the process of real estate transactions simply be asking for a purchase price of a property, in fact, it is much more complicated than that as one needs to obtain his/her own view what value means for him-/herself.

Value is subjective and requires a lot of analysis and thought in order to obtain comfort for financial decision-making. Especially a thorough market analysis is needed to better understand demand and supply for e.g. commercial spaces in the local market and prices. However, valuation in real estate is also a creative process as property use concepts can be changed or even upgraded for alternative uses. Also, good leasing can unlock hidden value in properties.

Recommended Reading: Should I Buy Investment Property Now

Forecasting Cash Flows With Real Estate Spreadsheets

Real estate spreadsheets are not only data files that consist of rows and columns used for sorting information but actually a great communication and analytical tool. A financial spreadsheet is mostly utilized by companies, entrepreneurs, and other entities, the same goes for real estate businesses and their related sectors.

In real estate financial modeling, the basis for a solid real estate spreadsheet forms the cash flow projections. Dgnng a rlbl rl tt spreadsheet requires a lttl rr thinking around the funtn, lultn, nd required utut u are considering. This huld be mlhd bfr you tull get going. Please find below the topics to be covered for developing cash flow projections for real estate spreadsheets:

  • Gross Potential Income
  • Capital Gain Taxes
  • Cash Flow After Taxes

These are the topics to be covered using real estate financial modeling to develop cash flow forecasts. Now lets look at the following example for building a real estate spreadsheet in Excel.

How To Carry Out Your Cre Analysis In Quarantine

CI 101: Financial Analysis for Commercial Investment Real Estate

Amidst the outbreak of coronavirus, commercial brokerages and investors are staring at some very, very murky waters.

Much of the nation is stuck working at home, in-person meetings are gone, and property owners are reluctant to make any immediate business decisions.

With such great levels of unknown, new deals and opportunities are flat out difficult to spot, and even more difficult to close.

What theyre left with is new downtime and a lot of unanswered questions.

This is why we believe that right now is to hone your commercial real estate analysis processes. You can use the additional downtime you might otherwise spend calling owners to conduct more thorough, nuanced, analysis and gather the data needed to make decisions in a highly questionable market.

Below, well look at the different areas of commercial real estate analysis, including the metrics you need to be looking at right now and the resources needed to do so during quarantine.

Read Also: Elca Mission Investment Fund Rates

Types Of Commercial Real Estate Analysis

There isnt just one, single way to conduct commercial real estate analysis. In fact, theres a multitude.

Property Analysis

Commercial property analysis is often the first step an investor takes before deciding whether to move forward with the purchase or sale of a property. There are four main components of a commercial property analysis:

Numbers include the potential purchase/sale price, as well as numbers associated with the physical property, including square footage, number of units, NOI and more.

Narratives are the stories that tell the unique history of a property, which may influence how a commercial real estate professional interacts with the property.

Indications are the signals that point to a persons intentions related to a property.

Assurance is some sort of validation that action is worth taking.

For example, an investor may be looking to purchase a small, garden-style apartment building. As part of his or her due diligence, they run through a commercial real estate checklist intended to help evaluate various investment opportunities.

One of the key steps on this checklist is to run a property title search.

After doing so, the property lien search reveals a mechanics lien on the property. The investor digs a bit deeper, and learns that the existing owner owes a roofing contractor $50,000 for services rendered back in 2015. This is part of the propertys narrative. For the investor to take title to the property, this lien will need to be cleared up.

Commercial Real Estate Analysis In 2020

There are multiple forms of commercial real estate analyses , but suffice it to say each type of analysis can be used by different parties for different purposes.

Real estate investors, property managers, lenders, brokers, and various contractors all analyze real estate in their own way. What it comes down to, is what part of a property or market they need to understand to inform their business.

Don’t Miss: How To Invest In Stocks With Cash App

Looking To Buy Commercial Property

Find out why triple-net lease real estate investments should be part of your investment portfolio.

Westwood Net Lease Advisors has made every attempt to ensure the accuracy and reliability of the information provided. Westwood Net Lease Advisors does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained herein. We are not lawyers, accountants , or certified financial planners, nor is the information herein considered legally-binding legal advice, tax guidance, or financial counsel.

The Commercial Real Estate Industry Is Evolving Are You

Sample Real Estate Investment Analysis Spreadsheet Excel ...

The CCIM curriculum is designed to enhance your career and deepen your knowledge with the comprehensive educational resources available from the CCIM Institute. The cornerstone of the CCIM program, the designation curriculum, is designed to equip practitioners with the skills they need to profit from the ever-changing commercial real estate industry.

Taught by established commercial real estate practitioners who emphasize practical application, the designation curriculum courses are the CCIM programs foundation. Upon completion, you will have a core knowledge base relevant across the entire commercial real estate industry, regardless of specialization.

Also Check: Nri Property Investment In India

The Real Estate Valuation Methods You Should Know

    The methods for analyzing the value of a real estate investment are analogous to those used in the fundamental analysis of stocks. Because real estate investment is typically not a short-term trade, analyzing the cash flow, and the subsequent rate of return, is critical to achieving the goal of making profitable investments.

    To profit, investors must know how to value real estate and make educated guesses about how much profit each will make, whether through property appreciation, rental income, or both. Accurate real estate valuations can help investors make better decisions when it comes to buying and selling properties.

    The Ccim Lapel Pin Is Earned After Successfully Completing A Designation Process That Ensures Ccims Are Proficient Not Only In Theory But Also In Practice

    This elite corps of CCIMs includes brokers, leasing professionals, investment counselors, asset managers, appraisers, corporate real estate executives, property managers, developers, institutional investors, commercial lenders, attorneys, bankers, and other allied professionals.

    • Recognized as an expert in the disciplines of Commercial & Investment Real Estate
    • Over 9,000 Professionals in North America & over 30 countries
    • Skills in Financial Analysis, Market Analysis, User Decision Analysis & Investment Analysis
    • $200 Billion in annual transactions
    • Most coveted & respected designation in the industry

    Belonging to CCIM means being part of an ethical and knowledgeable network that fosters lasting relationships based on mutual respect.

    You May Like: Why Is Socially Responsible Investing Important

    Real Estate Investment Analysis

    Attorney Dave Nesbit is also a licensed real estate broker and has been awarded the Certified Commercial Investment Member designation in recognition of his proficiency in the areas of investment analysis, market analysis, user decision analysis and financial analysis for commercial real estate and investment real estate.

    His experience includes development, sales, leasing, management, and asset analysis in more than 40 markets of 11 East Coast states, including portfolios valued at more than $100 million. He originally came to Cumberland County to begin the development of the Rossmoyne Business Center and has been integral to the development of restaurants, hotels, warehouses, office buildings, automobile and equipment dealerships, resort property, open space residential communities, historic restoration, and brownfield redevelopment. He has facilitated hundreds of real estate transactions over thirty years ranging from small residential investments to multi-million dollar industrial parks.

    He was chairman of the Industrial Commercial and Investment Council of the Greater Harrisburg Association of Realtors, and chairman the Private Developers Forum of the national NAIOP Commercial Real Estate Developers Association. He has been an accredited instructor and featured speaker at local and national events.

    For additional information or questions, give us a call at 717-697-3223.

    From Our Blog

    Real Estate Master Iiix

    Investment Analysis Of Real Commercial Real Estate Property I Viewed

    Visit WebpageTag Line: Simple to Use Residential Real Estate Finance Calculator

    Real Estate Master IIIx is a simple real estate finance calculator that gives real estate investors, agents and other mortgage industry professionals the ability to provide instant financial answers and expertise to their clients. The app can quickly solve for PITI and other hypothetical situations calculate future value and property appreciation, and show rent vs. buy cost comparisons among many other functions. Data and forms can be easily emailed to clients, allowing agents to instantly answer client questions and close more sales.

    Visit WebpageTag Line: Advanced Residential and Commercial Investment Real Estate Finance Calculator

    From the same makers as the Real Estate Master IIIx, comes a more advanced real estate finance calculator app. Ideal for real estate industry professionals, this app provides instant solutions to advanced and complex real estate finance problems. This app also provides information on P& I, PITI, and total loan payments for conventional, FHA and VA loans, cash flow solutions, complete on-the-spot buyer qualifying, and more.

    Recommended Reading: Invest In Stocks Or Cryptocurrency

    Looking For Real Estate Analysis Beyond The Capabilities Of An App

    With any of the apps on this list, you will be able to make quick decisions using reliable financial data. However placing the proper valuation on a property is really just the beginning of your endeavor. Calculating the approximate value of a property can be valuable in a pinch however, youll need a full, in-depth, and accurate appraisal from a professional property appraiser. You may even need future help with property management and development services. Thats when you know its time to call The Robert Weiler Company!

    The Robert Weiler Company will work with you to determine the best course of action, and, if needed, help you develop a customized package of services tailored to suit your needs. Contact The Robert Weiler Company today at 614-221-4286 and discover how they can make your real estate more profitable.

    The Robert Weiler Company

    Share post:

    Popular

    More like this
    Related

    Best Investment Companies For Beginners

    Stash: Best...

    How To Invest In Gab

    Adventures In...

    Where Do You Invest In Mutual Funds

    Mutual Funds...