new commercial project in Noida
Blog

5 Key Terms you should know before Investing in Real Estate

January 01, 2019

  • share

The terminology in commercial real estate can be a little frightening for many new investors. Initially, you may find it difficult to learn all the terms related to the commercial property investment. As an investor in commercial real estate, you have to know about these terms before start investing in the property. Understanding these essential terms used in the commercial property sector will aid you to highlight your proficiency in the industry and allow you to get better investment opportunities. Here we talk about five major terms that you must know before investing in the commercial property in Noida.

ROI

ROI or return on investment is the estimated profit of the investment (known as the return), divided by its rate. The ROI is effected by numerous variables like renovation costs and the loan amount you needed for the property investment.

COC

COC stands for cash on cash return which is the most common and easy metrics used by investors in commercial property. This particular term is used to calculate the ratio between the annual cash flow of an asset and the down payment of the commercial property. COC is usually evaluated before taxes.

NOI

This specific term is known as the Net Operating Income which refers to the revenue you make per annum from an asset, after considering the property expenses. Along with rental payment, you may also make other profits from the commercial property like parking space. Property expenditures include all costs that allow you to run and preserve a profitable asset that include utility, property tax, and property management cost.

Keep in mind that the Net Operating Income does not contain depreciation, loan payments, capital expenditures, and amortization. The NOI is measured before tax.

Capitalization Rate

Also referred as cap rate, the capitalization rate is about the NOI or net operating income divided by the sale worth of an income property. A capitalization rate is used to help you assess the potential ROI. Generally, a low capitalization rate gives a higher cost with reduced risk than a higher cap rate.

Building classifications

The property worth in commercial real estate is determined by groupings and classifications. There are four major categories when it comes to investment properties. These classifications include class A, B, C and D. Properties related to the class A refer to the asset in highly demanded markets. The A class properties claim remarkable aesthetics and structure, and need slight renovations and demand higher rental fees.

The other classes such as B, C, and D are categorized by a less popular location, less attractive features like an older building, poor construction and other factors which are not appealing for buyers.

Anthurium 73 Noida is such a commercial property that can aid investors and buyers to avail maximum benefits from their property. Anthurium is the new commercial project in Noida, located in the central location in sector- 73, offering smart digital offices and virtual offices for businesses.

Contact us to start
your first step in the digital world

Subscribe to our newsletter for
latest updates in the industry