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:
“When we say “science” we can either mean any manipulation of the inventive and organizing power of the human intellect: or we can mean such an extremely different thing as the religion of science the vulgarized derivative from this pure activity manipulated by a sort of priestcraft into a great religious and political weapon.”
—Wyndham Lewis (1882–1957)