Appraising a commercial building - what will they ask for?

6 Replies

I learned from a previous BP question that the 6 unit office building I am buying will likely be appraised using NOI/Average cap rate for the area.

How does the appraiser verify my NOI? Are they just going to look at tax returns on the building or do they want copies of leases/utility bills ect?

In the commercial appraisals I’ve had in the past have used three approaches. There is the comp, the income approach and the replacement method. They will weight those methods depending on the local market. 

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Originally posted by @Greg Dickerson:

To verify NOI They will use whatever financials you provide for the property. P&L, T-12, tax returns etc.

 If they're really savvy, they'll look up ownership of tenants to see if any occupancy is owner-owned and deduct it.

Originally posted by @Ronald Rohde:
Originally posted by @Greg Dickerson:

To verify NOI They will use whatever financials you provide for the property. P&L, T-12, tax returns etc.

 If they're really savvy, they'll look up ownership of tenants to see if any occupancy is owner-owned and deduct it.

Do you think that is common? I am going to be renting 2 of the 6 units to myself for 2 separate business. If they are going to deduct it I might try to rent one of the units to someone other than me.

Originally posted by @Adam Craig:
Originally posted by @Ronald Rohde:
Originally posted by @Greg Dickerson:

To verify NOI They will use whatever financials you provide for the property. P&L, T-12, tax returns etc.

 If they're really savvy, they'll look up ownership of tenants to see if any occupancy is owner-owned and deduct it.

Do you think that is common? I am going to be renting 2 of the 6 units to myself for 2 separate business. If they are going to deduct it I might try to rent one of the units to someone other than me.

Yes, common