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Investing in commercial real estate can be an important diversification strategy for an overall investement portfolio. Whether we are a current real estate investor seeking income-producing properties (or desires to), or an equity investor looking to diversify into in real estate, analyzing the numbers to determine cash flow, profitability and rates of return is a necessity.But without the support of good commercial real estate investment software, this task can be quite daunting. The key purpose of commercial real estate software is to calculate the investment potential of residential, commercial and mixed-use income properties. Through it prediction of expenses, cash flows, resale, financing, revenues, rates of return and partnership considerations can easily be calculated. With an incorporated commercial real estate software plan, individuals, investors, and developers can analyze potential projects without having to recreate a new spreadsheet every time. Good commercial real estate software leads to good organized thinking with a focus on the variables needed for analysis and not worrying about creating formulas in spreadsheets. Furthermore, the printouts from the software can be used to give to lenders as well as investors. The commercial real estate financial model consists of a variety of inputs needed such as rent, vacancy, construction costs and financing assumptions. Correct financial modeling takes these inputs and creates a mathematically and financially correct result which gives the investor confidence in his or her analysis. It also allows for faster “sensitivity analyses” – whereby it allows the investor an easy way to change some of the inputs to see what effect they have on the resulting returns. For example, if the investor wants a 20% leverage internal rate of return, it is fairly straightforward in most commercial real estate software to then be able to calculate the maximum purchase price that can be paid and still achieve this return.
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commercial real estate software, commercial real estate financial model,
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