Knowing and using the 3 and 4 Letter words. Today with all of the electronic devises there is a trend towards abbreviations using capital letters instead of full names. The government has been doing this for years with names like IRS, POTUS, FBI, TSA – You get the idea. Commercial real estate is no exception and unless you are using these every day you can become lost. Things like GRM, NOI, IRR, NPV, DCF, IRR plus many more will keep your head spinning. These are some of the more common ones but there are many more out there and it is a real challenge to keep up and remember them all. I was going through a list the other day and realized that about 1/3 of the abbreviations used in the commercial business I have never used or really had the need. That doesn’t mean that I won’t need them tomorrow.
It is a jungle out there! It is not enough to know what the letters stand for but what do they mean and when and how to use them. I won’t attempt to go over all of the ones listed above but an example would be – GRM (Gross Rent Multiplier) – is easy to calculate (gross revenue divided by asking price) but then you also need to know how to interpret the answer. Being informed about commercial real estate will allow a residential agent the opportunity to expand his or her business to include commercial property and increase their income.