Commercial Real Estate valuations have plummeted!

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!

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