Posts Tagged "Commercial Real Estate Investments"

3 Common Commercial Real Estate Terms Defined by Brian Fielding of Fielding Investments

Posted by on Apr 8, 2015 in Brian Fielding | Comments Off on 3 Common Commercial Real Estate Terms Defined by Brian Fielding of Fielding Investments

Keywords you need to know to master Commercial Real Estate Investments

In order to help commercial real estate investors be better informed this fall, Brian Fielding is sharing the definitions of three of the most commonly used terms in the field.

Brian Fielding of Fielding Investments knows that many of the terms used in commercial real estate can be confusing to first-time investors. With so many specific words and abbreviations used, it can be easy to get lost in a conversation about a property. In order to help real estate investors avoid any confusion, Brian Fielding is discussing and defining three of the most common commercial real estate investment terms.

Cash on Cash

This term refers to the formula that is used to determine and compare an investor’s property with the first-year performance of other competing properties in the area. This formula takes into consideration the detail that the investor did not require a full-cash investment to purchase the property. In addition, this formula accounts for the fact that the investor cannot and will not be able to keep all of the net operating income (NOI) for the property, as mortgage payments and other expenses need to be paid.

Net Operating Income (NOI)

The net operating income of a property is determined by finding out what the commercial real estate property’s first year gross operating income was, and then subtracting the operating expenses needed to upkeep the property for the first year. This is the amount of money that an investor will essentially take home with them from their investment. Property investment advisor Brian Fielding shares that this number should be positive, which equates to the individual getting money back on their investment.

Cap Rate a.k.a. Capitalization Rate

Known as either cap rate or capitalization rate, this figure is used to determine the overall value of an income-producing property. Commercial real estate investments such as strip malls, apartment complexes, commercial office buildings and more are properties where a cap rate is used to find out what the value of the investment is. Cap rates are also utilized to estimate the net present value for future cash flow and profits, a calculation that is also known as the capitalization of earnings.

For more information about other terms used in the commercial real estate industry as well as questions and answers to some of the hot-topic issues in the industry today, visit http://fieldinginvestments.com.

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