David Luke

Any successful real estate investment requires understanding the profitability of said investment. While profitability can be ascertained several ways in real estate, yield is one of the most important ones if holding rental properties. A percentage-based figure, yield is one way to calculate a property’s returns against its value.

What is Rental Yield?

Rental yield shows the annual return a property generates through rent, as … Read More

Businesses in the hospitality industry derive the bulk of their revenue from room sales. One of the key metrics used to understand room revenues is the average daily rate (ADR). If you’re investing in a hotel, motel, bed and breakfast or other lodging, it’s vitally important that you understand how to calculate ADR.

What is the Average Daily Rate or ADR?

The average daily rate … Read More

The commercial mortgage backed securities (CMBS) rate has been fluctuating in recent years, and sometimes has spiked as the commercial real estate landscape adjusts to new work  habits. Because CMBS are borrowed by real estate investors and purchased by securities investors, delinquency rates can affect both parties. Here’s a guide to CMBS delinquency.

Understanding Delinquency Rates

At its core, a delinquency rate quantifies the proportion … Read More

For real estate investors, understanding all of the numbers in any transaction is critical to determining if a transaction is worthwhile. Often, the focus is on determining if the return on investment is worthwhile, and that is often the case when costs are in line with earning potential. One specific area of focus is the cost of debt service. Mortgage constant is one of the … Read More

Securing financing is a process for any business that needs to borrow funds, but it’s especially challenging when going through bankruptcy. For businesses and firms that are facing bankruptcy, there’s debtor-in-possession financing (DIP financing).

What is DIP Financing?

DIP financing is a specific type of financing that may be available to businesses going through Chapter 11 bankruptcy proceedings. The term “debtor in possession” refers to … Read More

For investors considering the purchase of real estate, the goal is to keep costs as low as possible. A component of that is obtaining a low-interest rate, but it may also be important to minimize cash flow loss. An interest-only loan may offer some assistance in that area.

What is an Interest-Only Loan?

In its simplest terms, An interest-only commercial mortgage is a loan in … Read More

Any investment in commercial property is a significant one, and even the most well-managed properties suffer damage. Commercial insurance is a necessary investment, yet many investors don’t know much about their coverage nor how to take full advantage of the protections it provides.

What is Commercial Property Insurance?

Commercial property insurance is much like any other form of insurance. It is a policy taken out … Read More

Real estate investments require evaluation from multiple angles and using multiple metrics. One metric that’s gained increased popularity in recent years is unlevered free cash flow (UFCF). This calculation provides a unique perspective on an investment’s financial performance, focusing on how much cash flow a property generates.

What is an Unlevered Free Cash Flow in Real Estate?

Unlevered free cash flow calculates the cash flow … Read More

CAM charges are a common term seen on many commercial leases and in various transactions. It refers to the expenses the property owner charges back to the tenant for maintaining the specific area described. There are many factors to consider related to CAM, and understanding how this relates to any contract or lease agreement is critical prior to entering into such an agreement. Consider what … Read More

Commercial real estate investors have access to many different financing programs when they first purchase a property, but sometimes capital’s needed after a property is already owned. A commercial equity line of credit (CELOC) allows investors to use their equity as a means of attaining as-needed financing.

Understanding Commercial Equity Line of Credit (CELOC)

A commercial equity line of credit is a financing option that … Read More