How to find accurate data for commercial real estate?

Question

I noticed a lot of times commercial real estate prices (yearly net profit etc) are not accurate and hard to find out.

What's the best way to get accurate information on the commercial real estate sales price and yearly net profit price?

Renato Lorja · Answer

My name is Renato.

My colleague Arbi Goce specializes in commercial acquisition and disposition of triple net properties, especially 7-11's . I am sure he would be fine answering any questions for you regarding your concerns. He should be able to help you with any properties your looking at. Call him, he could be an excellent addition to your tool belt. His direct line is (858) 367 5905.

Good Luck

Rob Riv · Answer

There are laws against giving out inaccurate sales data, I think it falls under the fraud category. But just because it is illegal doesn't mean that people won't do it. Major companies on wall street cook their books all the time.

Steve C · Answer

Thanks for the info George, but my question is, how would I be able to know the accuracy of the "gross sales" since a lot of times I've found it to be inaccurate?

Isn't there a law or anything that prohibits anyone from giving out inaccurate sales data? (after all, it IS a business)

George Paiva · Answer

Hi Steve, didn't realize you were looking at commercial as in business commercial.   Usually this is done through a per sqft cost on compatibles.

As for actually buying out a business its all done via cap rate but each industry business has a different rate according to risk to value.

An example valuation for a Liquor Store. *disclaimer my family owns liquor stores in the northeast your experience may vary in other parts of the US.

Take Gross Sales multiply by Gross Margin (here we use a 20-25% margin) subtract out expenses like Lease, Advertisement, Utilities, etc... then multiply by 2.  This gives you a rough valuation on a liquor store plus any inventory on hand.

Steve C · Answer

Hey Joel, thanks for your reply buddy... I'm looking for gas stations, liquor stores, convenient stores (like 7-11), generally retail stores that does well in a recession...

The question is... is there any other way besides looking through their books to get accurate sales data? Someone mentioned using a paid subscription service... ??

Ty Golera · Answer

I've only done multifamily and am always smug when I see a rehab with "tenants in place" or guaranteed for one year. It makes you wonder what else is an eye-opener.

Jennifer Lee · Answer

I'm glad I went to chk it out and saw the businesses.
Walking away from this one,  picked up Intel MLS  can't give you.

Jennifer Lee · Answer

When I bought my commercial retail with a tenant, we just ask for lease. I talked to the tenant. Drop in to see how business is going.

I'm actually gonna do that right now, for a new deal.
I have no idea if tenants are staying or going.
Owner said fully rented. Yet has another listing to sell one of the larger tenant. Lol
Owner is realtor toi.

George Paiva · Answer

I suggest polling rentals in the area to see if what the owner provided is accurate.  I initially check craigslist and padmapper to spot check rent prices.

Keith Wiggins · Answer

I agree with Joel in that 90% of the information you get reported, especially from building owners, is very inaccurate.  There have been countless times I have spoken to building owners about their property and once I investigate and do my due diligence on their records I find the value of the property to be completely different.  The conversation usually turns downward once I mention the property is at a less market value than the owner wants.....  but at least my buyers are getting what they pay for right?!