Today I am sharing an article written by a colleague, Russell Roberts, MAI.
Today, I’m going to explain how losing money on commercial real estate makes perfect sense. Hear me out.
One of the primary methods used by commercial appraisers to value many types of commercial real estate is the ‘income approach’. The income approach is an attempt to quantify how much a purchaser or investor would be willing to pay for the future benefits of owning commercial real estate. Basically, these benefits consist of annual income generated by the property and also any expected profit (or loss) when the property is resold.