Derivative Efficiencies
Owning real estate assets is costly, and the transaction costs associated with purchasing commercial real estate can be prohibitive. Typical transaction costs can equal 500 - 800 basis points per transaction. Industry estimates suggest that transaction costs for commercial real estate easily surpass $10–$12 billion annually. Since the US real estate derivative market is new, the transaction costs are at this point variable. However, based on derivatives in other markets, it is anticipated that the costs will be well below the 500-800 basis points required to invest in actual real estate.
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Famous quotes containing the word derivative:
“Poor John Field!—I trust he does not read this, unless he will improve by it,—thinking to live by some derivative old-country mode in this primitive new country.... With his horizon all his own, yet he a poor man, born to be poor, with his inherited Irish poverty or poor life, his Adam’s grandmother and boggy ways, not to rise in this world, he nor his posterity, till their wading webbed bog-trotting feet get talaria to their heels.”
—Henry David Thoreau (1817–1862)