Evaluating purchase price of an office building
I'm new to commercial real estate. I've only done residential in the past so bare with me.
I saw a commercial building for sale in my area. I contacted the real estate broker to ask several questions about the property. I know each commercial property is unique but since this guy deals with commercial properties in the area for a living, I asked him what he has seen buildings similar to this one go for in the past. This was his response:
We have a market seller here but if I had to guess, I suspect this trades between an 8.5 & 9% cap rate
Can someone explain, in plain English, what this means? Do I have to pull up financials for the property again and do some calculations?
Thanks for the help.
Most Popular Reply
Well said @Account Closed
There is a ton of attention on Cap rates currently. Not always the barometer of a successful investment. In my opinion, just one calculation in several that need to be considered when measuring risk / return on an asset.
@Russell Gronsky There is a Find a CCIM area on the main CCIM website, look a local one up. There is a good chance a local CCIM (or colleague) may already be familiar with the deal. Good Luck and Happy Hunting!