Investor · Carmichael, CA · Member since 2014 · 30 posts · 4 votes
Greetings,
We are inheriting partial interest in a commercial property in east Sacramento. I do not have any experience with commercial real estate. I assume we need to establish a basis of value. Should we seek a brokers opinion of the property, similar to residential properties, or do we need to have it appraised? Are commercial appraisers very expensive? The property is currently leased to an old landmark type of tavern, and to a small take out place that sells hot pocket sandwiches (pasties). Both leases run through 2018, and we feel the rent collected is low for this location. What is a good way to get the leases evaluated?
All comments are welcome and appreciated.
Very Best,
Paul
Investor · Lubbock, TX · Member since 2015 · 308 posts · 106 votes
10y
I don't think you'd need a full appraisal in order to determine what the rent should be. You could probably just talk to a local commercial real estate broker to get some comps.
Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
10y
If you have a will and not a trust then there will be a probate.
If your brother in law does not have an attorney go to websites like Superlawyers, Lawyers.com, Avvo.com and similar rating services to find an experienced probate attorney in Sacramento.
Everybody's been to 2 Me. That place is LEGENDARY in SacTown! Very cool.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
10y
If you are the person in charge, in other words the fiduciary as principal, you will have access to documents which outline your capacity, powers and authority.
Asking others on this forum to guess about your role is a bit pointless. We don't know.
One of the jobs of the person in charge is to determine the date of death value of all assets of the Decedent's estate. Title to real property may be vesting in the name of "trustee of the XYZ trust." Or, in a partnership, LLC or as tenants-in-common with one or more other natural persons (or entities).
How the assets are held could make a big difference.
The date of death value of a fractional interest is not something that falls into the day to day experience of a licensed appraiser. A BPO would likely estimate current value of the total asset based on current market conditions.
If the appraisal assignment is to determine DOD value to satisfy a taxing authority such as State or IRS, a "Probate Referee" would be my choice. Search the term online and either get a list from the local probate court or ask a local Sacramento area probate attorney.
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
10y
@Paul PostYou can find a commercial leasing broker to find out what the average rent per sq ft is in that area. I remember going their a few times when I was younger. fun times.
Investor · Carmichael, CA · Member since 2014 · 30 posts · 4 votes
9y
We are further along the process of settling this estate and I was hoping for some additional help with my next step. We have obtained 2 broker opinions on the property and have settle on an average value of $850K based on these opinions. 50% of the property is owned by another family. On our side, both of our siblings have stated an interest in selling their interest, so it would cost us $283K out of pocket to obtain a 50% interest in the property since my wife inherited 1/6 interest. The gross rents collected are $4,400 per month for both leases, so our monthly income would be $2,200 if we purchase the shares of our 2 siblings. Since both leases are triple net, the only expense we would have is insurance and maintenance for the building exterior for which we will set aside $307 / month. So I calculate a cap rate of 5.34%, and a cash on cash value of 8.03%. Any thought and opinions on this deal are appreciated.
We have a meeting set with family owning the other 50% for Friday evening to help us evaluate the group we would be partnering with if we go through with the purchase. I am trying to compile a list of questions to ask them without sounding like an inquisition. Keep in mind that this history of ownership has been congenial and informal, maybe some would say unsophisticated in terms of real estate technical standards. Any advice on how to approach this meeting?
We will decide whether or not to proceed with this deal and buy the other siblings shares by Sunday 10/12.
Thank you for reading and your considerate replies.