Chicago Multifamily Property Blog

Loss to lease is a commonly used calculation in a commercial real estate analysis. However, loss to lease can also be one of the most confusing calculations to understand, especially when you see it for the first time. In this article, we’ll take a closer look at the loss to lease calculations and walk through several examples to help you understand what it is and how it works.

Every investment involves a certain amount of risk. There are certain general sources of risk that influence all assets – things like geopolitical risk and global macroeconomic risk. What makes each asset unique is the level of sensitivity that its rate of return has to those risks. In addition, specific types of assets have risks that are uniquely their own. In this article, we’ll look at eleven types of risk in commercial real estate investment.

One of the unique challenges of commercial real estate investment is that markets, types of property, return expectations, and physical environments are in a constant state of change. As a result of these changes, a commercial property could be cash flow positive one day and undesirable the next due to shifts in tenant desires or some other factor. The real estate term for this type of risk is “obsolescence” and there are three types that CRE investors should be aware of.

When real estate investors are evaluating a potential rental property purchase or a bank is underwriting a potential loan, one of the first documents that they will ask for is the property’s “rent roll” or “rent roll report.” In this article, the rent roll document is described in detail and its utility in the CRE due diligence process is highlighted.

It is very common for a lender to require a borrower to open a checking account as part of the transaction. Because of this, it is critical that borrowers have awareness of a lightly understood and rarely enforced, but potentially devastating clause in a typical retail bank’s deposit account agreement known as the “Right of Offset.”