You need some basic math tools to succeed with commercial property. This does not mean just addition and subtraction. (They are involved though!) You have to be able to interpret what different numbers mean.

Misreading the numbers has been the downfall of many great investors. Avoid this by knowing the issues at stake.

* You can determine value using net operating income - Commercial property value is the net. You get the net by subtracting the cost of operations from the money brought in. A building that brings in 5 million dollars sounds great. But you end up with a net of ten dollars if operations run 4,999,999. Doesn’t sound so great now!

* Always know income versus expense - You definitely need hard numbers for this one. You need to have every number or you do not have enough information. You cannot project these numbers. You also must not make assumptions. Major losses could result. You can solidly back deals with solid values.

* Assumptions increase your risk - You will raise the risk in a deal with every assumption. Assumptions cannot be guaranteed. You must resist the attraction of deals based on assumptions. Some assumptions may be necessary though. For example, you might assume that a building will keep tenants. This assumption still adds to the risk issue.

Commercial property investing is definitely very exciting. It is one of the classic “millionaire-makers.” However, you must be realistic about every commercial property you consider. You can increase your odds of success by using care when investing in commercial property.

You need some basic math for commercial property investing. Addition and subtraction is not all there is to it. (They are involved in the action though!) You need to have a basic understanding of what different values mean.

Misreading the numbers has been the downfall of many great investors. You can avoid this in most cases by knowing the issues at stake.

* You will determine value using net operating income - A commercial property is worth its net. You need to subtract the operations costs from the gross income to get the net. If a building generates 5 million dollars a year, that sounds great. However, if it costs 4,999,990 dollars a year to operate the building, you have a net value of ten dollars. Doesn’t sound so great now!

* Always be clear on the income versus expense - You will need hard numbers for this one. You need to have every number or you do not have enough information. Projections cannot stand in for these numbers. You also must not make assumptions. You could end up with major losses by doing so. You can more solidly back deals if you know the values for certain.

* You will increase risk by making assumptions - The risk in a deal rises with each assumption. This is because an assumption is not guaranteed to be true. Look away from the deals that rely on assumptions. Of course, some assumptions may be necessary. You might decide to allow the assumption that you will keep your building’s tenants. Of course this assumption is still a risk issue.

Being involved in commercial property is definitely exciting. It is one of the classic “millionaire-makers.” Just stay as realistic as you can about commercial properties. You can increase your odds of success by using care when investing in commercial property.

If you are interested in commercial property investing, then you need to understand some basic math. Just part of it will be basic addition and subtraction. (They are involved in the action though!) You need to be able to tell accurately what different numbers mean.

Misreading the numbers has been the downfall of many great investors. You can avoid their mistakes by knowing more about the issues at stake.

* Net operating income determines value - You will know the commercial property value if you know the net. You get net by subtraction operations costs from the gross income. What about a building that generates 5 million dollars each year? But you will get a net of ten dollars if the operations costs are 4,999,999. That building does not sound so good now, does it?

* Always be clear on the income versus expense - You definitely need hard numbers for this one. You need every number or you do not have enough information. These numbers are unacceptable as projections. Nor can you make assumptions about them. The wrong projection or assumption could lead to major losses. You can more solidly back deals if you know the values for certain.

* • Assumptions equal increased risk - Each assumption increases the risk in a deal You will never be able to be confident that an assumption is true. You must resist the attraction of deals based on assumptions. Some assumptions may be necessary though. For example, you might assume that a building will keep tenants. But this is still a risk issue.

It is definitely exciting to be involved with commercial property. It is one of the classic “millionaire-makers.” However, you must be realistic about every commercial property you consider. You can increase your odds of success by using care when investing in commercial property.