An executive and real estate investor with more than 35 years of experience, Louis Paolino founded Paolino Development in 2008 to serve clients in the commercial and residential sectors. Working with properties in luxurious locations such as Miami and The Hamptons, Louis Paolino is an expert in high-end property development.
Commercial real estate properties are those owned exclusively for business activity. In general, the value of a commercial property is determined by how much money it earns for the owner. A real estate developer commonly uses a cap rate to create a figure for the value of a commercial property.
To calculate a cap rate, divide the net operating income of the business occupying the real estate by the asking price. Net operating income is determined by subtracting the annual expenses of property ownership from the rental received. Many professionals consider a cap rate between 4 and 10 percent to be an indication of a good investment.
