Stabilized Transactions Mastery Lesson 12

Lesson Twelve: Conclusion & Looking Ahead

12.1 Conclusion

Stabilized real estate properties are an accepted asset class for investment diversification. The safest assets are those with the following characteristics:

  1. Macrolocation: A large dynamic market (New York, Washington, D.C., San Francisco, Chicago)
  2. Microlocation: Well located in the submarket
  3. Newer construction
  4. Excellent tenant credit quality, with long-term leases

Stabilized investors are not bargaining on surprises. With knowledge, these investments can outperform stocks and bonds. Yet, the intelligent investor must understand the key components in value added investing:

  • Operating history
  • Rent roll
  • Cash on cash return (the cap rate)
  • Leveraged cash on cash return
  • Operating expense structure (pass through & stops)
  • Leverage structure (underwritten NOI)
  • Market/demand drivers

So, do we have a deal or no deal? Below is a review of how to determine if you have the right deal to move forward with.

Are you ready?

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