Category: Office Investing Education

What is a Letter of Intent in Commercial Real Estate

As more investors look to add commercial real estate to their portfolios, demand for commercial property has risen to new heights. Many prospective investors will look at dozens, even hundreds, of properties before making an offer to purchase. Before they do so, however, most will submit what’s known as a “letter of intent” – or LOI – as a precursor to a more formal, binding agreement with the seller or landlord.

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What is Cap Rate Compression?

Cap rates can be an incredibly valuable tool for investors looking to establish a property’s value. The cap rate, expressed as a percentage, is calculated by dividing the property’s net operating income by its purchase price. The resulting percentage generally ranges anywhere from 3 percent to 15 percent or more.

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What is an OM in Commercial Real Estate?

People who have been in the commercial real estate business for any length of time have heard of an Offering Memorandum (OM). While marketing flyers and brochures are publicly distributed to the general investment community, a good commercial real estate OM is used to generate interest from the most qualified prospective investors and bring them to the deal table.

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