Commercial Real Estate Frontline

We lost sight of the basics were were taught as kids.  In fact, did you know that every day more money is printed for Monopoly than the U.S Treasury?  It took an email chain with a list of factoids to get me thinking that perhaps we went wrong with commercial real estate investment decisions that weren’t well informed and that strayed from the fundamentals of financial analysis for commercial real estate.

What made Monopoly  a great game wasn’t the goofy dog, iron, or wheelbarrow that you hipped and hopped around the board, it was what Monopoly epitomized. It taught us the basics of capitalism and how the accumulation of assets, wise investing, and staying out of jail could ultimately lead in our being successful commercial real estate investors.

Isn’t this how it went?  House, House, House, House, Hotel.  Collect your rent. Buy more houses and hotels.  Focus on location.  Park place was sexy because it paid out well, but you didn’t usually buy it because tenants rarely made rent. You learned that buying in high traffic locations and building high value assets paid big and allowed you to accumulate more wealth.

Did you ever notice that those who usually went for the highly speculative investments with high leverage usually didn’t grow and eventually ran out of money? Sound familiar?

Let’s take one from Monopoly and focus on the basics this year.  Invest in good locations, high traffic, solid cash flows, and a diversified mix of hard assets.  Apply debt and positive leverage to drive higher returns.  Don’t put all of your eggs in one basket. And bet on the sure things. They pay.

About the Author:Jeremy Cyrier is a principal with MANSARD Commercial Properties and member of the CCIM Institute faculty.  He offers advisory services and brokerage expertise to commercial real estate owners and tenants.
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