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Commercial Real Estate Pricing Model
Commercial Real Estate Pricing Model
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Commercial Real Estate
Pricing Model
Input / Output Guide

Gross monthly rent for the property.

Estimated vacancy % of property.

Fields to enter annual property taxes and insurance expenses if available.
Estimated ratio of additional operating expenses to Effective Gross Income
Cap rate target for sale or investment.

Cap Rate =
NOI/Price

The most amount of income the property can generate annually.

Potential Gross Income =
Monthly Rent x 12

Income after vacancy is removed.

Effective Gross Income =
Potential Gross Income - (Potential Gross Income * (1- Vacancy %)

Net income generated after vacancy and operating expenses.

NOI =
Effective Gross Income - Expenses

Target price for sale or investment.

Price =
NOI/Cap Rate

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