Commercial Real Estate valuations have plummeted! Many sellers are still in denial. 🙄
Most Commerical Real Estate is valued by the Net Income approach.
Valuation = Net Income / Cap Rate
⭕️Net Income is the revenue minus all expenses besides the mortgage.
The Net Income of many commercial properties is deteriorating or nonexistent. ⬇️
⭕️Cap Rate is the rate of return or a measure of risk.
The Cap Rate of most Commerical Real Estate has increased due to higher risk. ⬆️
End results are commercial real estate valuations have declined.
Valuation ⬇️ = Net Income ⬇️ / Cap Rate ⬆️
You gotta love Algebra!