Knock, knock. Who’s there? Commercial Lending. Commercial who????!! Exactly. In a world where lending is so hard to find, or even non existent nowadays, I’m going to share with you a few lending sources for your commercial deals. But first, let’s catch up on a quick update in the commercial real estate market today…so watch on, fellow investors!
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Oct. 26 (Bloomberg) — Paul Adornato, senior analyst at BMO Capital Markets, talks with Bloomberg’s Julie Hyman about the outlook for the commercial real-estate market and real-estate investment trusts (REITs). (Source: Bloomberg)
www.REIClub.com – Effective Gross Income (EGI) Is An Important Number in Commercial Real Estate. Here’s How To Calculate EGI For Your Real Estate Investment… Hi, this isFrank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on how to calculate effective gross income (EGI) for commercial real estate investing. Effective Gross Income (EGI) The amount of income produced by a piece of property, plus misc income, less vacancy costs and collection issues. Investors use the EGI to determine how much they are willing to pay for the property based on how much they expect to make in earnings. Gross Potential Rent (GPR) The expected income a property will produce when fully occupied and all rents are collected. Example 10 unit apartment $800/month $8000/year x 12 months = $96000 Other Income/Revenues – laundry facilities – vending machines – car wash centers – additional storage – personal errand services – late fees from rent – parking permits – covered parking – etc… Example: $1000/mo in additional revenue $12000/year Total Potential Revenues (Gross Income) GPR + other income = $108000/year Vacancy The vacancy rate is the percentage of all the rental units that are vacant in relation to the total amount of units in the property. (Total Vacant Units) / (Total Units) = Vacancy Rate Average vacancy rates are around 5-10% Credits Money or percentage of income that is estimated to be lost due to non-payment of rents. Also includes …