If you are interested in purchasing commercial real estate, it is important to know what the value of it is to ensure that the asking price is not more than what the property is worth. In order to calculate the value of the real estate, the one thing that is important to know is: how much does the property make? While there are other factors to consider such as age and demographics, the amount of profit is the single most important aspect in determining value.

Calculation of the amount is very important. To find the net operating income, find the difference between the total income brought in (rent, fees, etc.) and then subtract any expenditure from that total income. This number you calculate is the net operating income. This is pre-taxes, so it is not profit; however, it gives an idea on how much the property brings in.

You have to calculate the capitalization rate. To do this, divide the net operating income by the sale price. The fair market value (FMV) can be given to you by a real estate agent who specializes in commercial property. You'll get a percentage here and what is typically acceptable is 6 to 10 percent.

Consider the demographics and economics of the area. If it is a rising area, the property might be worth more in the future, so paying more than the current value would make for a wise investment. This is because, while it might seem expensive now, it will be inexpensive in the future and that results in more profits.

Consider the age of the property. If it is a brand new property that was well constructed, it can sell for more. However, if the property is run down and is going to need even more money to make the property fully functional, this brings down the cost in the property.

Turn to the financial statements in the annual report. This is the company's raw financial data. It is audited and submitted to the Securities and Exchange Commission for review so it is considered to be the most reliable and accurate financial data from the company. There are three main financial statements that provide different types of financial data.