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Updated over 4 years ago on .

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10
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1
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Dave Wittnauer
1
Votes |
10
Posts

Valuation question - more than cap rate?

Dave Wittnauer
Posted

I am preparing to sell commercial property that I inherited a couple years ago that is located out of state.  It has really become too time consuming.  I'm hoping to use the proceeds to fund the purchase of something closer to home.  The way the leases are setup as a non triple net situation in a multi-tenant commercial building means that I field a ton of calls and things that I consider routine, but they fall to me.  If I continue to pay someone to do light maintenance, or hire a property management group, it doesn't make financial sense to hold as there are too many other opportunities.  

I can take the cap rate of a few different percentages and get an idea of what the building is worth based on cash flow.   It seems like this is most important to an investor since the place would immediately be profitable.  If I tweak that number based on location, future potential, lease quality and price, etc... which all lead to relatively minor changes, is there anything else that I should be thinking of?

I will ultimately sit down with a commercial broker to hash out an agreement, but I'd like to do some research about pricing and have an idea of pricing worked out so it isn't a complete guess when meeting the broker?

I appreciate any tips from the experienced crowd!

Thanks!