A couple a months ago, I posted Will You Make Money on This Deal? This article created a good deal of interest because it is common knowledge that the value of a commercial investment property is generally in the leases. This new post gives a little more detail on the answers from my previous post. Test your lease knowledge.
1. A triple net lease is most commonly associated with what property type(s)? A. office; B. retail; C. industrial or D. all of the above
2. Operating Expenses include: A. property taxes, insurance, advertising; B. capital reserves, property taxes, insurance; C. property taxes, utilities, leasing commissions; or D. all of the above
3. Cash flow before taxes includes: A. property taxes & insurance; B. advertising & capital reserves; C. property management fees; or D. all of the above
4. Which property type is closest to a true triple net lease? A. strip center; B. office building; C. ground lease; or D. industrial building
5. Which property type has the lowest average cap rate in the Sacramento MSA? A. office; B. industrial; C. retail; or D. multi-family
Answers: 1B, 2A, 3D, 4C and 5D
How did you do? If you got 100%, great. Of course, if you did, you probably know this is a very simple quiz. To really understand how to come up with a value on a commercial investment property, take my Deal Analysis Basics course where we go into detail on each of these topics. Knowing the facts about a piece of commercial investment property just makes good sense to your bottom line.
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