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FED Funds Rate vs. Mortgage Rates: Understanding the Disconnect
In the final quarter of 2024, the Federal Reserve cut the federal funds rate twice, stirring excitement among potential homebuyers who anticipated a drop in 30-year mortgage rates. However, mortgage rates did not follow suit, leaving many puzzled. This outcome, while counterintuitive, aligns with how fixed mortgage rates are influenced by broader market dynamics. The […]
Key Market Metrics
Despite what you may hear, there is no perfect market for investment. Each market offers different advantages each appealing to different investors. We have a list of factors we use to measure a market’s potential. These factors are applied to markets and submarkets alike. Population Growth Probably the most important metric is population growth. It […]
Market Types: Primary, Secondary, & Tertiary
Markets generally break down into three categories 1) Primary, 2) Secondary, and 3) Tertiary. There are pros and cons all three and investors should align their interests with the proper markets. Population is usually the driving factor in determining which category a market falls into, but this is not the only factor to consider. Primary […]
Commercial vs Residential Multifamily
This short article will briefly highlight the differences between residential and commercial multifamily properties. Residential multifamily applies to assets between 2-4 units. This includes duplexes, triplexes, and quads. 5 or more units fit into the commercial multifamily category. Although lots of investors plan to move into larger commercial family after residential, there are things to […]
Capitalization Rate: What is it? Why is it important?
Calculating the Capitalization Rate or Cap Rate is relatively simple. There is a formula most people refer to as IRV (Income/Cap Rate/Value). If you have the net operating income (NOI) of a property then you can divide the NOI by the Cap Rate to determine its value. For example, say you have a property that […]
How Operational Factor Contribute to Returns
Individual Rate of Return (IRR) For most investors, IRR is the most important metric in multifamily investing. IRR alone can determine whether an asset is a viable offering to interested investors. Given the gravity of IRR, it’s important for operators and investors alike to understand which operational factors contribute the most to IRR. Craig Drummond […]
What is Cost Segregation and Bonus Depreciation?
As you may be aware tax advantages are one the main reasons investors choose to buy real estate. This article will focus on two popular tools to improve the tax advantages of owning real estate: 1) Cost Segregation and 2) Bonus Depreciation. Requirements We often get the question, “can I apply cost segregation to my […]
Key Terms in Commercial Real Estate Investing
These terms are tossed around by syndicators and passive investors alike. Below are a few must know terms if you ever plan on investing in a real estate syndication or to start one of your own. Internal Rate of Return (IRR) The IRR is the most indicative metric used in commercial real estate investing. It […]
3 Phases of a Real Estate Syndication
Acquisition Phase This phase involves identifying, evaluating, and securing a multifamily property which requires market research, property analysis, negotiating terms, and finalizing the purchase. Market research is important for longevity and affordability. A lot goes into ensuring you are in the right market which is a separate article in and of itself. However, there are […]
Why Should You Invest Passively In Commercial Real Estate
Passive investments in real estate are a great way for busy professionals to enjoy the appreciation, cash flow, and hedge against inflation. Investors looking to passively invest in real estate have 3 primary options Real Estate Investment Trusts (REITs) Purchasing through TURNKEY providers Commercial Real Estate Syndications This article will briefly talk about each and […]
