Detailed Commercial Real Estate Video Library

These commercial real estate videos that detail how to use and understand planEASe are also availible from within the planEASe Software using the "Movie" menu items.

Assumption Set Specifications
Switching Models
Import using EzEntry
Investment
Investors
Depreciation
Loans
Revenue
Revenue Existing Leases
Revenue Lease Up
Revenue Owner Representation
Revenue Tenant Representation
Expenses
Reimbursements
Market Profiles
Development Spending Dialog
Development Unit Sales
Portfolio
Partnership/LLC
'What if' Sensitivity
'What if' Risk
Reports
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Graphs
Presentation
Measures
Ratios
  • Capitalization Rate
  • Cash on Cash
  • Debt Coverage Ratio
  • Adj Capitalization Rate
  • Adj Cash on Cash
  • Breakeven Occupancy
  • Gross Income Multiple
  • NOI - Property Value
  • Operating Expense Ratio
  • Loan Balance - Property Value
  • Current Rate of Return
  • Accounting Rate of Return
link to this page: http://www.planease.com/commercial-real-estate-video-training.aspx?1=Ratios&2=CurrentRateofReturn

Video: MeasuresRatios Current Rate of Return

How is the Current Rate of Return calculated for commercial real estate investments and developments? What are the factors that the Current Rate of Return takes into consideration when shown in a proforma income statement, and what is ignored? Why is the Current Rate of Return useful for investment real estate?

Considers:
  • Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only), Sale Proceeds Increase (Current Year Only)
Ignores:
  • Vacancy, Time Value of Money, Other Years NOI, Other Years Sale Proceeds

    ... and a lot of other things

Why is Current Rate of Return useful?

Current Rate of Return is not commonly used in commercial real estate analysis. It is a Return on Investment (ROI) type ratio where the cash flow is divided by an investment. Here the investment is assumed be the amount of proceeds you could have received if you sold the property in the beginning of the year, and the cash flow part is the cash flow plus the increase in sale proceeds in the next year. So if this is a high percentage number, do you want to sell in the beginning of the year or after you have received the year's cash flow plus the increase in sale proceeds? If all the assumptions are true, you might want to wait until the current rate of return is a small percentage number.

What is the Current Rate of Return Sensitive to:

Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only), Sale Proceeds Increase (Current Year Only)

The Current Rate of Return is shown in these planEASe Reports:

Author:

How is the Current Rate of Return calculated for commercial real estate investments and developments? What are the factors that the Current Rate of Return takes into consideration when shown in a proforma income statement, and what is ignored? Why is the Current Rate of Return useful for investment real estate?

Considers:
  • Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only), Sale Proceeds Increase (Current Year Only)
Ignores:
  • Vacancy, Time Value of Money, Other Years NOI, Other Years Sale Proceeds

    ... and a lot of other things

Why is Current Rate of Return useful?

Current Rate of Return is not commonly used in commercial real estate analysis. It is a Return on Investment (ROI) type ratio where the cash flow is divided by an investment. Here the investment is assumed be the amount of proceeds you could have received if you sold the property in the beginning of the year, and the cash flow part is the cash flow plus the increase in sale proceeds in the next year. So if this is a high percentage number, do you want to sell in the beginning of the year or after you have received the year's cash flow plus the increase in sale proceeds? If all the assumptions are true, you might want to wait until the current rate of return is a small percentage number.

What is the Current Rate of Return Sensitive to:

Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only), Sale Proceeds Increase (Current Year Only)

The Current Rate of Return is shown in these planEASe Reports:

Author: