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7 Commercial Real Estate Terms You Should Know

An investment in commercial real estate can help you take your finances to the next level. You need to know the basics of commercial real estate investors to understand how you can benefit from it, to know more visit https://estesgroup.net/ or call us on 601.362.9633.

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7 Commercial Real Estate Terms You Should Know

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  1. 7 Commercial Real Estate Terms You Should Know The growth speculations in commercial real estate are attracting investors at a massive rate. Although, investing in real estate is quite intimidating, especially for those who are new to it? There are certain terms that are part of the purchase letter or lease clause. Knowing them all is going to be useful in making mindful decisions. Rather than feeling confused, get yourself educated by understanding the 7 most useful terms of commercial real estate. 1.Usable Square footage: To determine the price of a unit, usable square footage can be used. It is the wall-to-wall space that tenants occupy. 2.Referral fee:If a client is referred by one broker to another, they are going to charge the referral fee. To put it simply, there will a broker and a co-broker dividing the commission.

  2. 3.ROI:Return on investment is also referred to as Cash on Cash Return. It helps to determine how fast you can get your money back by investing in a property. 4.Rate of Capitalization: Also known as Cap Rate, the metrics are used for analyzing the risk factor in an investment. If the operational expenses are less and the cap rate low, the investment is low risk. 5.Debt Service Coverage Ratio: The ratio tells if the borrower is capable to pay the debt on time. To measure the debt capacity, one can divide the operating income by the total debt. If the result is higher than 1, the borrower has a good repaying capacity. 6. Right to sell agreement: The agreement protects the commission of the broker. No matter who finds the buyer, the property owner is still liable to pay the broker fee under the right to sell agreement. 7.Closing costs:A real statement transaction involves varied steps that going to cost you money. The closing costs usually include inspection, insurance, tax and commission. Bottom line To make sound decisions, one should possess in-depth knowledge of the industry and its terms. If you need expert guidance, then The Estes Group can be of great help. They are a large group of property managers and leasing agents in Jackson, MS.

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