I was a terrible math student. How and why I ever decided to get a degree in accounting is a mystery to me! One of the first jobs I had after graduation was working for a plant that sold steel. My job, (I can’t believe I ever did this!) was to manually write down every piece of steel in inventory. Since we cut pieces for our customers 24/7, I had to write/track every single cut. At age 23, I didn’t really grasp how important this information was to my firm. Luckily after a year of complete boredom, I made a break to commercial real estate. I would soon learn why the numbers are important as a business owner.
With every transaction we complete at Compass Commercial, we provide a financial summary. What most people don’t realize is it more than just the rent/s.f. To make matters more complicated every type of real estate has different “standards,” and I use that term lightly because not every landlord really understands the “standards,” or doesn’t really care and does it their way.
Throughout 2018 I will be offering a blog series on commercial real estate math. Each math blog will give an example of a math equation for an expense in real estate. We’ll start with the easy ones, like annual rent and rent/s.f. Over the course of the year we’ll get to what a “base year” means and how to calculate all the costs in a transaction. This series will be called “Commercial Real Estate Mathematics” Hold onto your seats as I teach you Commercial Real Estate Math!