Long hold

There are great commercial real estate opportunities for those who can pay with cash. But the big question is: how long to hold until investors see a return on their investment?

“Buy stuff you can live with today,” counsels Randy Anderson, the chair of real estate at the University of Central Florida.

Anderson says some commercial real estate investors are overpaying, spurred by a flood of investor money chasing too few deals. He's seen top-quality buildings in the Orlando area sell for as high as 5% capitalization rates, a commonly used ratio in the business defined as annual net operating income divided by price. Such low cap rates were last seen only during the recent boom.