Paul Sternberg Houston Texas Explains Commercial Real Estate
Houston, Texas. August 16, 2018 (Ebiznewswire.) – Paul Sternberg knows real estate and if you live in Houston Texas this is a must read. Capitalization rates are a fundamental concept used when selling homes to estimate the ROI potential for a particular project. To calculate ROI start by dividing the investment property’s net operating income by the current market value.
“Alternatively, the current market value can be changed for the buying cost of a property,” says Paul Sternberg of Houston, an experienced real estate investor, businessman, and entrepreneur.
“Capitalization rates are insanely important when comparing real estate investment opportunities,” Sternberg continues to say. “But, while the capitalization rate of a commercial property is an excellent starting point in determining its potential. One of many factors.”
Paul Sternberg continues to say, that the condition of a building is often as a big influence on the ROI. “A piece of real estate which shows a high ROI at first, but is in poor overall condition will ultimately cost money in renovations over time,” suggests Sternberg of Houston. “Furthermore, a property with a lower capitalization rate will continue to earn an investor money over coming years, largely without the worry of significant and potentially extremely costly repairs,” Paul Sternberg says.
When both the net operating income along with the market value does not change, capitalization rates (ROI) will remain unchanged.
“If the net operating income of a property continues to increase,” says Paul Sternberg. “While the market value does not. Then ROI goes up. If, however, the opposite happens, the capitalization rate will fall.”
For a commercial real estate investment to be very beneficial and you can make a lot of money. Sternberg explains that both net operating income and market value must increase in at the same time. “If net operating income increases at an even greater rate, then that’s even better,” he adds.
Paul Sternberg also points out that while capitalization rates are great for pinpointing the potential of an investment. They are also highly useful when tracking the value of investments over time or long term.
“If after investing, the capitalization rate of a property begins to decline,” Paul Sternberg of Houston adds in closing, “it may then be time to consider selling up and starting over.”