commercial fundamentals

Question 1

what are the two type of return?

Answer 1

• return of investment
  -return on investment

Question 2

what is capitalization?

Answer 2

process investors rely on to measure value. it is used when applying the income approach

Question 3

what is the IRV formual/ cap formula?

Answer 3

I= NOI
R= cap rate
V=value

Question 4

NOI formula

Answer 4

NOI= revenue- expense

Question 5

revenue vs profit

Answer 5

Revenue describes income generated through business operations

profit describes net income after deducting expenses from earnings.

Question 6

Operating cash flow

Answer 6

its the money transferring in and out of a commercial business

operation cash flow = NOI- Annual debt service

Question 7

investor

Answer 7

its analyzed based on a return of investment

investor consider:
-risk exposure to loss
-rate of return
-cash flow
-income stability

Question 8

user

Answer 8

looking for a property to occupy for a specific economic purpose, its important to collect all relevant info about the building

Question 9

understanding the user and investor

Answer 9

its all about need, risk and return

Question 10

risk and return factors

Answer 10

the higher the risk, the greater the return
risk increase with uncertainty