Author: Lance Langenhoven

What Do NNN, NOI, and Cap Rate Actually Mean?

If you’re new to commercial real estate investing in the USA, you’re probably running into a lot of unfamiliar terms and acronyms. It can feel like learning a new language—but don’t worry, it’s simpler than it seems.

Three of the most common terms you’ll see in listings are NNN, NOI, and Cap Rate. Here’s what they really mean—and why they matter.

Let’s start with NNN.

This stands for Triple Net Lease, and it refers to a lease structure where the tenant, not the landlord, pays for three key property expenses: property taxes, building insurance, and maintenance / management costs. These are often referred to as the “three nets.” So, when you see “NNN lease,” it means the tenant is covering those costs, which leaves the landlord (you) with fewer ongoing expenses.

It’s also worth noting that these three costs are listed in order of priority. You can sometimes delay maintenance (not recommended), but you can’t delay paying property taxes. If you do, the county could take and sell your property to recover what’s owed.

Next is NOI, which stands for Net Operating Income.

This is one of the most important numbers in real estate. It’s calculated by taking your total rental income and subtracting all of your operating expenses—including those NNN costs if you’re responsible for them. What’s left is your NOI. It tells you how much money the property is actually making before debt payments and taxes.

Finally, we have Cap Rate, or Capitalization Rate.

This is a quick way to estimate the return on a property. Once you’ve calculated your NOI, you can figure out the Cap Rate by dividing that number by the purchase price of the property. For example, if a property produces $100,000 a year in NOI and the purchase price is $1 million, the Cap Rate is 10%.

Cap Rate = NOI ÷ Purchase Price

This gives you a snapshot of how profitable a property is right now. It doesn’t take future changes into account, like increased rents or renovation costs. For long-term planning and forecasting, you’d use a different metric called IRR (Internal Rate of Return)—but we’ll save that for another post.

If you’re just starting out, understanding these three terms—NNN, NOI, and Cap Rate—can give you a major head start when evaluating commercial real estate opportunities.

We specialize in helping foreign nationals invest in U.S. commercial real estate, and we’re here to help you understand the financing process, the numbers, and the strategy behind each deal. We’re not just lenders—we’re active investors and developers ourselves.

So, give us a call and let’s talk about your next deal.

Lance Langenhoven

Head of Commercial Lending

[email protected]

The Difference Between Cap Rate and IRR

Some investors won’t move forward on a deal if the cap rate is too low. In some cases, they can’t even calculate a cap rate because there’s no income yet. A good example of that is buying vacant land for a future development.

Personally, I prefer to invest in deals where the IRR, or Internal Rate of Return, shows a potential return of at least 20% on an all-cash basis. If it’s a development project, I’m aiming for 30%. Even though I usually use financing, I always start with the all-cash IRR. It’s a reality check.

It’s really easy to get pulled into a deal just because the IRR looks great when financing is included. But the risk can be much higher than it seems, and if things don’t go as planned, you could end up dealing with a foreclosure.

So here’s how I approach it. If the all-cash IRR looks solid, I’ll then run a second IRR analysis using financing. That version will naturally show a higher return, but I already know the deal works without needing debt to make it pencil out.

Now you might be thinking: how is a strong IRR possible if the cap rate is super low, or even zero, on day one?

Here’s the thing. Cap rate is just a snapshot of the property’s income at the time you buy it. It can’t see into the future. It doesn’t know what you plan to do with the property. Think of it like a still photo taken on closing day.

IRR, on the other hand, is like a video. It starts the day you close and continues through the full hold period, typically five years. It sees everything you’re planning to do.

For example, maybe you’re buying an apartment building that’s only 50% occupied. The IRR sees your renovation plan. It sees you increasing rents by 25% once the upgrades are done. It sees your improved management pushing occupancy to 95% within a year. And it sees continued rent growth year after year.

Eventually, the video gets to the point where you sell the property, now in excellent condition and in a highly desirable location—say, near the beach in California. Thanks to all the improvements, you’re able to sell at a strong price with a final cap rate of 5%. That’s why the IRR looks attractive, even though the cap rate at purchase didn’t.

Another thing to remember is that an IRR calculation always includes an exit event to complete the picture, even if you’re not planning to sell. A lot of investors refinance instead, pull some equity out, and roll it into the next deal.

So next time you’re evaluating a commercial property, don’t get discouraged if the cap rate looks weak. Focus on your business plan. Understand the upside. And work with someone who can help you run the IRR numbers correctly.

By the way, we love working with foreign nationals investing in U.S. commercial real estate. Not only can we help with financing, we’re active investors and developers ourselves.

Contact me today and let’s talk about your next deal.

Lance Langenhoven

Head of Commercial Lending

[email protected]

Commercial Real Estate News: Stay Informed, Stay Ahead

If you’re planning to invest in commercial real estate in the USA, keeping a close eye on the news is absolutely essential.

Market dynamics change quickly—whether it’s interest rate shifts, zoning changes, new developments, or large acquisitions in your target area. Being plugged into the right news sources can give you an edge and help you make smarter, faster decisions.

Here Are Some Top Commercial Real Estate News Sources:

A mix of free and paid options, so you can choose what fits best:

Some of these platforms cover national trends, while others allow you to zoom in on specific cities or regions, which is especially valuable if you’re targeting a particular market.

Why This Matters (Especially for Foreign Investors)

If you’re a foreign national investing in U.S. commercial real estate, staying on top of local market news is even more critical. These platforms help you stay informed about:

  • Local developments
  • Investment opportunities
  • Legal and regulatory changes
  • Major tenant or landlord activity
  • Shifts in cap rates, rents, and valuations

Knowing what’s happening in the market—before others do—can help you move quickly on a great deal or avoid a potential pitfall.

We love working with foreign nationals investing in U.S. commercial real estate, helping them secure the financing they need to succeed. We’re not just lenders—we’re active investors and developers too, so we understand what it takes to navigate the U.S. market.

Contact us and let’s discuss your next deal.

Lance Langenhoven

Head of Commercial Lending

[email protected]

Don’t Miss Out — Great Deals Don’t Wait Around!

Ever hear about someone else landing an incredible deal and think, “Why wasn’t that me?”

Well, I’m here to tell you—it can be you. You just need to be the one who’s ready.

The secret? Always be looking. Great deals don’t come with flashing neon signs or friendly heads-up calls. No one’s going to politely wait for you to clear your schedule and then let you know, “Hey, the best deal of the year just hit the market… take your time getting to it!”

Yeah… that’s not how it works.

So what is a “great” deal?

A great deal:

  • Offers the potential for significant profit in a short period
  • Is rarely on the market for more than a few days
  • Will be locked up fast—sometimes within hours

What’s not a great deal:

  • It’s been sitting on the market for months
  • It’s been seen by hundreds (or thousands) of potential buyers
  • It’s still available because everyone else has already passed on it

Timing is everything.

The best deals are often scooped up the same day they hit the market. You need to spot them fast, analyze quickly, and get your offer in. I’ve personally put deals under contract on day one—without even stepping foot on the property—because I knew my numbers and had confidence in the market.

Sure, this isn’t for beginners. But if you know your stuff, this is exactly how you land a winner.

So why would someone list an incredible deal?

It happens more often than you think. Here are a few of the usual suspects:

  • Death – The heirs want quick cash and have no idea what the asset is worth.
  • Divorce – Quick sale, fast cash, less hassle.
  • Debt – The owner is drowning in payments and just wants out.
  • Disaster – A major life event forces a sudden relocation or sale.

The point is, life happens—and sometimes that creates opportunity for the prepared investor.

Want to catch a great deal?

You’ve got to be scanning the market daily. Set alerts. Use platforms like CREXi.com to filter the types of deals you want. And be ready when opportunity knocks.

We love working with foreign nationals investing in U.S. commercial real estate, helping them secure the financing they need to close fast and with confidence. We’re not just lenders—we’re investors and developers too, and we understand what makes a deal work.

Contact me today and let’s talk about your next deal.

Lance Langenhoven
Head of Commercial Lending

Bridge Financing: Fast, Flexible Funding for Commercial Real Estate

Bridge financing, as the name suggests, is designed to get you from where you are now to where you need to be.

This type of financing helps investors close commercial real estate deals quickly—especially when traditional bank loans are too slow or simply unavailable. You’ll also hear it referred to as hard money lending.

Why Use Bridge Financing?

Bridge loans are ideal for deals that need speed or flexibility—like value-add or turnaround projects. Because banks tend to be conservative, they often won’t lend on properties that are underperforming or need major improvements. That’s where bridge lenders step in.

These lenders are willing to take on more risk in exchange for a higher return. In other words, they’ll fund deals that banks won’t touch—because they know the investor is planning to improve the asset and boost its value.

What’s the Catch?

Since bridge loans come with higher risk, they also come with higher interest rates—typically 4 to 5 basis points (or more) above a conventional bank loan. But the upside? Most bridge lenders offer interest-only payments, which can help keep your monthly cash flow under control during the renovation or lease-up period.

Real-World Example

Let’s say you’re trying to buy a commercial property that’s only 60% occupied. You approach a traditional bank for a loan, but they reject the deal—it’s too risky, and they’re not confident in your experience as a sponsor.

But a bridge lender sees the opportunity. They’re able to close fast, helping you beat out competing offers. You lock in a 24-month bridge loan with interest-only payments.

You move quickly to renovate the property. Once it’s upgraded, you raise rents and boost occupancy. Now the property looks much more attractive on paper—and traditional lenders take notice.

After 12 to 24 months, you refinance into a long-term conventional loan with a much lower interest rate and 20-year amortization.

If the property’s value has increased significantly, you may even be able to pull cash out during the refinance—giving you capital to invest in your next deal.

The Bottom Line

Bridge financing is a powerful tool for investors who:

  • Need to close fast
  • Are acquiring properties that require repositioning
  • Can’t qualify for bank financing—yet
  • Plan to refinance once the property stabilizes

Used wisely, it can be the launchpad to your next big project. Just be sure to factor in the higher interest rates and have a clear exit strategy in place.

We love working with foreign nationals investing in U.S. commercial real estate, helping them secure the financing they need to make deals happen. And since we’re not just lenders—we’re investors and developers too—we understand the challenges you’re facing.

Give us a call and let’s discuss your next deal.

Lance Langenhoven

Head of Commercial Lending

[email protected]

The Capital Stack: What Every Commercial Real Estate Investor Needs to Know

If you’re planning to invest in commercial real estate in the USA, understanding the Capital Stack is essential. It’s one of the most important concepts in real estate finance—and knowing how it works can help you close more deals, make smarter decisions, and ultimately protect your investment.

Let’s break it down.

What Is the Capital Stack?

The Capital Stack refers to the different layers of financing that make up a real estate deal. Each layer comes with its own risk, reward, and priority when it comes to how profits (or losses) are distributed.

From the top (least risky) to the bottom (most risky), the capital stack typically looks like this:

  1. Senior Loan
  2. Mezzanine Debt
  3. Preferred Equity
  4. Common Equity

Here’s how each layer works:

1. Senior Loan (Least Risk, Lowest Return)

This is typically a bank loan and has the highest priority in the capital stack. That means the lender gets paid first. Because it’s the most secure position, it usually comes with the lowest interest rate.

2. Mezzanine Debt

This comes after the senior loan in priority and is typically provided by non-bank lenders. It carries more risk than the senior loan, so it comes with a higher interest rate. Mezzanine lenders usually have the right to take over the senior loan if payments are missed to protect their position.

3. Preferred Equity

These are investors who put in capital but don’t have control over operations. They get paid after the debt is serviced, but before common equity holders. Because they’re taking more risk, they expect a higher return—often 10% or more.

4. Common Equity (Most Risk, Highest Potential Reward)

This is where you, the sponsor or active investor, typically sit. You’re the last to get paid—but if the deal performs well, you get the biggest upside. You’re also the first to take a hit if things go sideways.

Real-World Example

Let’s say you’re doing a $10 million deal.

  • A bank offers you 50% in a Senior Loan ($5M)
  • A private lender offers 20% in Mezzanine Debt ($2M)
  • You raise another 20% from friends, family, or investors as Preferred Equity ($2M)
  • You put in the final 10% as Common Equity ($1M)

Now the capital stack is complete, and you’ve got the funds to close.

But here’s the key: the deal has to perform well enough to cover everyone lower in the stack. That means paying the debt, preferred returns, and then having enough profit left for you as the common equity holder.

When Is This Structure Used?

A layered capital stack is most common in value-add or turnaround deals—situations where the property needs work, but you believe you can increase its value significantly.

For example:

You purchase a property with low occupancy, invest in renovations and better management, and increase occupancy to 90%+ over two years. Then, you refinance the property at its new, higher value—often at lower interest rates.

In some cases, you may be able to refinance for more than the original capital stack, letting you cash out some equity to reinvest into your next deal.

Important Reminder

Be careful not to over-leverage your deal. Too much debt might make your deal look better on paper, but it adds risk. If things don’t go perfectly, you could end up in default—or worse, lose the property entirely.

Want to Learn More?

Check out this in-depth guide to the capital stack:
👉 Everything You Need to Know About the Capital Stack

We love working with foreign nationals investing in U.S. commercial real estate—and helping them get the financing they need to succeed. We’re not just lenders—we’re investors and developers ourselves, so we understand what it takes to make a deal work.

Give us a call and let’s talk about your next deal.

Lance Langenhoven

Head of Commercial Lending

[email protected]