Key Takeaways:

Avoid Overpaying

Value in commercial real estate is based on income (NOI), not comparable sales

Always verify the actual trailing 12-month financials

Know the market's cap rate

Never buy on potential alone, pay for current earnings

Understand True Operating Expenses

Don't trust the broker's pro forma

Carefully check:

Actual property taxes

Deferred maintenance costs

Management expenses

Necessary reserves

Match Financing to Your Business Plan

Ensure loan terms align with property stabilization timeline

Avoid short-term debt for long-term investments

Don't over-leverage

Build sufficient reserves for unexpected challenges

Due Diligence is Critical

Verify every number independently

Understand the property's current performance

Plan for realistic timelines and potential setbacks