Key Takeaways:
Avoid Overpaying
Value in commercial real estate is based on income (NOI), not comparable sales
Always verify the actual trailing 12-month financials
Know the market's cap rate
Never buy on potential alone, pay for current earnings
Understand True Operating Expenses
Don't trust the broker's pro forma
Carefully check:
Actual property taxes
Deferred maintenance costs
Management expenses
Necessary reserves
Match Financing to Your Business Plan
Ensure loan terms align with property stabilization timeline
Avoid short-term debt for long-term investments
Don't over-leverage
Build sufficient reserves for unexpected challenges
Due Diligence is Critical
Verify every number independently
Understand the property's current performance
Plan for realistic timelines and potential setbacks
The Commercial Real Estate Investor Podcast