Commerical property help!

[Carah Hanley]

Hi all, I wholesale in Arkansas and have stubbled on an awesome lead for a small resort. Main cabin house with 16 motel style units on 5 acres, needs updating but all structures in fair condition. Seller is motivated! I have spoken with them several times but am fixing to drop the ball because I can't figure out to put a accurate value on this investment! Any advice on how to run the numbers for this type of commerical property?

[Ken Naim]

@Carah Hanley as with any commercial property, there are 3 ways, comps, cap rate based on Net operating income and replacement cost. Since this sounds like a unique property comps are partially out. If the units are vacant and there is no income, cap rate is out, leaving replacement cost. What would it cost to buy an equivalent parcel of land and build something similar? Then figure out how much it would cost to repair the units and estimate the income, expenses and local cap rate for this asset type and you have a proforma NOi and selling price aka ARV. Hope this gives you a general idea of how to value the property. Good luck