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How to value commercial property?

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Answers (3)

3rd May 2010 by Mr Big

Although there are many factors, primarily, you look at current cash flow, FUTURE cash flow potential, brand recognition (pay to be noticed), and in certain instances (for example a storage locker business along the highway)
the land lock value. This last one is where cash flow is not that important. What counts is that the income generated by the property is used to pay the interest on the loan, taxes, and more important, lock up the land for future potential growth or profit.

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23rd Nov 2009 by Michael Haltman

The question of how to value a property is definitely two pronged. One of the answers concerns residential property, while the other looks at commercial property.

When looking at placing a value on a residential piece of property, one has to remember that a house is a commodity. For the most part it is valued by emotion as well as the location and other factors. Areas get hot and get cold for a variety of reasons, and other than the overall state of the real estate market will help to dictate what someone is willing to pay.

Commercial property on the other hand is strictly an investment. People don't fall in love with kitchens or back yards, but with the cash flow that building generates. Therefore, two identical buildings on the same block could be valued differently due to the cash flow that each throws off.

I will be more specific in the valuing commercial real estate question.

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17th Nov 2009 by Gary

Similar to housing, commercial property is valued by the neighborhood it is in, and that includes the type of commercial neighborhood, along with the type of customer you'll attract from the surrounding area. If you're talking about a retail store, this isn't too difficult to figure out, as the vast majority of customers will be easily identifiable through demographics of the area you should easily get from a Chamber of Commere or local government. If the commercial property is rentals, then you go to similar things you would look for in buying a house, in the sense of the neighborhood you'll be offering the rental in. With any type of commercial property, it's always, as the saying goes: location, location, location. From there you determine the condition of the property, etc. But location is everything.

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12th Nov 2009 In Real Estate 3 Answers | 1778 Views
Subjects: commercial property,

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