commercial property is an extremely interesting subject. This is probably thanks to the huge potential profits from any one deal. Of course the converse may also happen. Without proper diligence you could lose that much.

You need some basic math for commercial property investing. Just part of it will be basic addition and subtraction. (That is part of it, though!). You need to have a basic understanding of what different values mean.

Misreading the numbers has been the downfall of many great investors. You can avoid this in most cases by knowing the issues at stake.

* Value is determined by net operating income - The net is the commercial property value. Net equals money brought in minus the cost of operations. A building that brings in 5 million dollars sounds great. However, if it costs 4,999,990 dollars a year to operate the building, you have a net value of ten dollars. That building does not sound so good now, does it?

* Always be clear on the income versus expense - You need hard numbers in this case. You need to have every number or you do not have enough information. These numbers cannot be projected. Nor can you make assumptions about them. Doing so could result in some major losses. You can solidly back deals with solid values.

* You will increase risk by making assumptions - Every assumption you make raises the risk factor. You cannot guarantee that an assumption is true. You must resist the attraction of deals based on assumptions. It could be argued that some assumptions are necessary. You might elect to assume that you will keep a building’s tenants. However this assumption still contributes to the risk issue.

Being involved in commercial property is definitely exciting. It is a classic money maker. Just be realistic about commercial properties. If you are careful and meticulous, you will have better chances with commercial property.