Commercial ARV

[Parish Simmons]

what is the best way to determine what a commercial property will be worth after rehab or how much the property is discounted, such as previous selling prices. Also what is a discounted price per square foot for office, retail, and industrial commercial properties? thank you!

[Steve R.]

Parish,

There are basically three ways that are typically used to value commercial properties: how much it would cost to build the property minus depreciation (cost approach), discounted cash flow analysis from the income the property produces (income method), and comparing the subject property to recent sales of similar properties. Make sure you are familiar with cap rates in your specific area, as this is usually a good starting point when comparing one commercial property to another.

Some good places to get commercial property info is costar, loop net, local brokers and appraisers, as well as your local assessors office.

Good luck