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“If you need to know about a realty texas, here you are.”

The lender isnt required by law to cancel it.

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Real Estate

Indexes Commercial Real Estate Investors Should Know

Consumer Price Index (CPI): Most of commercial real estate leases have annual
rental increase that is based on the CPI. As an investor you should know what it
is. The CPI is a measure of the average change over time the prices paid by
urban consumers for goods and services. In a sense it is the measure of
inflation as experienced by urban consumers. So as an investor/landlord, you
want the rent increased to catch up with inflation. The US Department of Labor,
Bureau of Labor Statistics collects data from 87 urban areas in the US which
cover about 87% of the population. The data is published each month and
available from the website http://stats.bls.gov. Although there is only one name
for the CPI, there are various numbers: US city average, Northeast urban,
Midwest urban, South urban, West urban, as well as 14 major local areas. So you
need to know which number is defined in the lease so you can correctly calculate
the rent increase. For example, the CPI for US city average was 190.9 in Oct
2004 and is 199.2 in October 2005. This reflects a 4.3% increase for one year.
So if the rent from October 2004 to September 2005 was $1000/month and the lease
says the rent is increased based on the CPI for US City average then the new
rent from October 2005 to September 2006 will be $1043 a month or 4.3% higher.

Cost of Living Index (COLI): COLI is a number that indicates the relative cost
of living in various cities in the US with 100 being the average. You could
obtain the indexes for various cities from http://www.infoplease.com/ipa/A0883960.html.
The COLI for San Francisco is 177 while it?s only 97.2 for Atlanta. This means
it costs 82% more to live in San Francisco than Atlanta.

As an investor, you often review median income in the demographic data for the
area where the property is located. You prefer to invest in a more affluent
area. The median income alone does not give you a whole picture. You will have a
better perspective if you adjust the income based on the Cost of Living for the
area and then compare with the median for the area you know. For example if the
median income is $80K a year in Alpharetta in Atlanta metro area, it would be
equivalent to $145,600 in San Francisco. With this adjusted number you know that
Alpharetta is a very affluent area.

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