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Concepts

May 5, 2018

6 min read

Discounted Cash Flow Analysis in Commercial Real Estate

As an investor, understanding DCF analysis will empower...

In essence, DCF analysis is a method used to estimate the value of an investment based on its expected future cash flows. By discounting these cash flows back to their present value (hence the term "discounted" cash flow), DCF analysis can help investors determine whether an investment is likely to be profitable, based on the projected returns versus the cost of the investment.

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November 29, 2017

5 min read

An Overview of Core, Core Plus, Value-Add and Opportunistic Investments

If you spend any time around commercial real estate...

If you spend any time around commercial real estate, you’re bound to hear the terms core, core plus, value-add and opportunistic real estate thrown around. These terms are used to define the level of risk and return potential of an investment property. Not only are the physical attributes of the property used to define an investment but the amount of debt financing to support the project is also imperative.

To explain why the debt financing has such an important role, I find it easy to understand if you look at a single-family property. If a property has a long-term lease in place, it can sound attractive to a conservative investor who wants to play it safe. However, if the same property has been primarily financed through debt with very little equity, it can paint a very different picture. Should the property value decrease, the owner could end up owing more on the property than it’s worth.

As a commercial real estate investor, you should know about each of these terms. Let us take you through them one by one to help you understand them better.

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