The Cap Rate Conundrum

shutterstock_1188428608 [Converted]-01-1Even in the volatile market we've been experiencing in 2020, investors are still looking to do what they do best—invest their money.

With everything so uncertain, finding the right place to invest your money becomes quite challenging. Typically, commercial real estate is a safer bet for a steady ROI compared to other investing options.

Based on what we're seeing today, even with weaker fundamentals, we're likely to still see a great deal of investments in the commercial real estate industry.

Whether you're an investor or a tenant, if you are in the position to purchase a building, it is important to consider a few factors and understand some of the industry lingo.

Before we jump into the industry trends, the cap rate conundrum, what a future state of the market could look like, and a real-world example, here’s a quick primer to help give meaning to the information covered in this week's market update:

Cap Rates: (NOI) ÷ Purchase Price

NOI: Net Operating Income

Yields: Yields are the amount of profit an investment will gain.

If you have any questions about your commercial real estate situation, or need advice on your lease agreement, let us know. We’re here to serve.

Connect With a Keyser Advisor