How does outdoor storage & outdoor covered storage appraise

[Brandon Jack Reneau]

Hello BP,

I'm working on getting a boat/RV storage facility built. When it comes to refinancing will the parking spaces/covered spaces income be considered in the appraisal value when it's time to refinance? Is there a good way to develop one of these facilities and get the most bang for your buck when you refinance? 

[Brad S.]

Hey @Brandon Jack Reneau, I'm not 100% clear on what you're asking or doing.

Is this a commercial property you are developing into a boat/RV storage yard? ..or is this a sfr you are building a boat/rv storage garage?

My guess is you are talking about a residential property. If that is the case, most likely your boat/RV storage facility will considered an over-improvement, unless that is a common amenity in the area. And as an over-improvement, it typically has an only incremental positive affect on value and appeal, if any. For residential property, income is not typically not a significant factor in the valuation, since residential properties are typically purchased for owner use, not for income producing potential. But, again, I am unsure of exactly what the situation is.

[Brandon Jack Reneau]

@Brad S. It will be a commercial property. That will only be used for RV/Boat self storage. 

I have 4 acres. Im looking to improve one acre with outdoor & covered parking (in phase 1). 

I'm wondering if the improvements + cash flow will add enough value for me to refinance and start developing the other 3 acres. 

[Brad S.]

Quote from @Brandon Jack Reneau:

@Brad S. It will be a commercial property. That will only be used for RV/Boat self storage. 

I have 4 acres. Im looking to improve one acre with outdoor & covered parking (in phase 1). 

I'm wondering if the improvements + cash flow will add enough value for me to refinance and start developing the other 3 acres. 

@Brandon Jack Reneau ok, got it, that makes sense.

So, I am not familiar with the area or the local market there, but I am an appraiser and have done commercial work. But, I have never specifically done that type of assignment before. But, basically, you need to estimate what the cap rate of that type of commercial property is and then the income you can generate (NOI-net operating income), to calculate the estimated value. If you are a commercial realtor in that area, you may have an idea of what the cap rate is, or you could ask a few local commercial realtors or appraisers.

But, generally, yes, the income you can generate on the commercial property should be utilized to estimate the property value.

Actually, now that I think about it a little more, you may also want to contact a commercial lender now and ask their opinion, that may give you some more direct insight. They may have dealt with similar properties in the past.

I'm sure you knew some of that already, but hopefully it was somewhat helpful.

[Ronald Rohde]

I own/finance several of these. They use an income approach with some cap rate. Without much value in the improvements its a very wide range of what they will finance. I doubt you'll generate enough income from 1 acre to develop 3 more. If you already own the land, its very cheap to develop these. Gravel or concrete? canopies or not?