Compared to a nationwide slump in the residential real estate market, the commercial real estate market is somewhat healthier because its investors have acted more logically based upon the analysis of cash flow return even during the past few years when the real estate market was overheated.

The basic analysis for investment in commercial properties includes but is not limited to the following five methods (each method has its cons and pros):

1. Gross Rent Multiplier = Purchase Price / Year 1 Potential Rental Income

This however does not consider Vacancies, Operating Expenses, Debt Service, and Taxes

2. Direct Capitalization = Year 1 Net Operating Income / Purchase Price

This however does not consider Debt Service, Taxes, and the Value of the Eventual Sale of the Property

3. Cash on Cash = Year 1 Cash Flow before Tax / Down Payment

This only shows one year period

4. Internal Rate of Return = Average Rate of Return over the Life of the Investment

This however does not consider Time Value of Money (Opportunity Cost)

5. Net Present Value is the most useful tool

Note:

Gross Income – Vacancy Loss - Operating Expenses = Net Operating Income

Net Operating Income (NOI) – Debt Service = Cash Flow before Tax

Cash Flow before Tax – Income Tax Liability = Cash Flow after Tax

In addition, the following considerations are involved:

a. Investment Characteristics

b. Personal Risk Tolerance, Tax Position and Expertise

c. Economy, Population and New Regulations

d. Location and Age of Building

While appraisers help determine Market Value, Investment Advisers help search for Investment Value. The Commercial Team of Nevada Real Estate Corp. consists of a CPA, an Attorney, a Contractor, an Home Inspector, an Architect, an Engineer, and several MBA's. Many of the team members are native to Las Vegas and familiar with its society and history. In addition, team members are comprised of varying cultural backgrounds (Chinese, Japanese, Thai, Filipino, Laotian, Malaysian, Vietnamese, Panamanian, Mexican) which helps interact with a larger pool of investors and enhances our international vision.