Compound Interest in Commercial Real Estate
Compound Interest is when interest is added to the principal amount after each period, and the next recurring interest calculation includes the principal along with the accumulated interest — making a sum grow exponentially.
Fixed Interest Rates and Variable Interest Rates in Commercial Real Estate
Every loan agreement comes standard with a form of interest that must be paid. Interest rates can be negotiable but usually appear in one of two forms: Variable or Fixed. A Variable Interest Rate loan has an interest rate on the outstanding balance that rises or falls based on the current status of the market interest rate. On the other hand, a Fixed Interest Rate loan has an interest rate that remains constant for the duration of the agreed loan term.