Pdf | Peter Linneman Real Estate Finance And Investments

In his calculations, zero vacancy is a fantasy. He provides formulas for "Economic Vacancy" (which includes downtime between tenants, free rent periods, and collection loss). He suggests pro-formas should assume a minimum of 5-10% economic vacancy even for fully leased buildings.

Real estate private equity funds, REITs, and exit strategies. Practical Investor Perspectives peter linneman real estate finance and investments pdf

Amateurs say: "I bought a building at a 7% cap rate, so I make 7%." Linneman says: The cap rate is a valuation metric (NOI / Price). It does not account for debt service, capital expenditures, or leasing commissions. Your actual cash-on-cash return could be 0% or 15%. In his calculations, zero vacancy is a fantasy

Linneman simplifies macroeconomics: Real estate prices are driven by (demand for space) and Construction Costs (supply of new space). Ignore CNN. Ignore crypto. Watch your local payroll reports and lumber prices. Real estate private equity funds, REITs, and exit strategies

If you manage to get your hands on the PDF (more on that later), here is the table of contents you will actually read. The book is structured into logical building blocks: