commercial property calculations
I am looking at purchasing a nice commercial building. It doesn't need repairs and I will occupy 50% of the building for my business. I am trying to calculate an asking price. The 50% that I will occupy has been vacant for 9 months. I would like to capitalize on that but my broker is advising against that. When I calculate the NOI I come up with $15,816 a year but with the way the building sits now it is loosing $4290.00 a month. Of course when I rent it we will cash flow instantly. They are asking $1,000,080.00. According to my calculations I should offer somewhere around $775,000-850,000. My broker is saying I shouldn't look at offering less than a 10% reduction in the asking price.
Can someone help me with this offer. I do know all the expenses as well. Other buildings in the area are going for around $800,000-1.4 million. It is considered a class B rental property. Well cared for.