Key Takeaways: Avoid Overpaying Value in commercial real estate is based on income (NOI), not comparable sales Always verify the actual trailing 12-month financials Know the market's cap rate Never buy on potential alone, pay for current earnings Understand True Operating Expenses Don't trust the broker's pro forma Carefully check: Actual property taxes Deferred maintenance costs Management expenses Necessary reserves Match Financing to Your Business Plan Ensure loan terms align with property stabilization timeline Avoid short-term debt for long-term investments Don't over-leverage Build sufficient reserves for unexpected challenges Due Diligence is Critical Verify every number independently Understand the property's current performance Plan for realistic timelines and potential setbacks
