All Forum Posts by: Cason Acor

Because the zoning is heavy industrial, you also need to consider if the city would even let you rent the house out as an SFR. I know in some cities they don't. If that's the case, then you would just price it as a normal warehouse property.

What specific information are you looking for? You mention wanting to use something that will search multiple types of records, but don’t say what it is you’re trying to find. 

Utah is a non-disclosure state, so there is a lot less public information available about real estate transactions. 

.5 of an acre is not a lot to work with, especially if there’s not good street visibility/access. I would consider using the lot to expand your existing building and doubling or tripling the size, and turn it into a multi-tenant building. 

How big is the building on the front half?

The commission sharing is the same as in residential brokerage, for the most part. If I were going to list this building, I would charge a 6% fee. Depending on your market, there might be more competition in multi family brokerage, and you could negotiate that down. 

Your best bet will be to price the apartments and retail separately, and then blend them. 

Look up comparable apartment rents, sales prices, cap rates, etc. Price your apartments against those. Do the same for the retail space. Then calculate the blended average cap rate and price per square foot. 

Assuming that $132,000 number you mentioned would be your NOI, that makes this an 8.25% cap rate. In my market nothing industrial trades for higher than a 7 cap these days. Look at comparable returns for your own market, but this honestly seems like a pretty good deal.

It might go without saying now, but this is a good lesson on what specifics to include in your future leases.

@Craig Garrow becuase the NOI you're using is on current rents, than I would look at this from a cost per square foot perspective. Cap rate becomes a shaky valuation tool when you're dealing with high vacancies. I would definitely start looking at comparables and see what similar buildings are selling for on a cost per square foot basis.

My biggest concern is who exactly would go in those vacant spaces, and how soon could you fill them? And is the $9,500 number you calculated on current rents, or a pro forma number once it’s full? 

$150,000 with a $9,500 NOI is a 6.3% cap rate. That cap rate is way too low to pay for a half vacant, older office building in a small market.

To answer your question, yes, people are still buying commercial real estate, and there’s still a lot of good deals. This could be a great first commercial investment for you. But without knowing much more about your market, I probably wouldn’t pay less than a 10% cap rate for that building. You might also consider paying either a local broker or appraiser for an opinion of value to see what comparable properties are going for. That could give you leverage in the negotiation.