Hello.
I did a search and did not see much about valuation that I thought was relevant to my question.Say am I given a brochure and I see incomes:
$60,000 approx
$90,000 approx
$160,000 approxas a rough back of the envelope type calcualtion what would I expect to see the auction price hit.. for each?
What is the rule of thumb for commercial valuations based soley on income and no other factors.
Cheers.
It would probably depend on what similar properties in the area are going for and what their yield is. Hard to estimate based on rent alone.
Terryw
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There are benchmarks for different types of commercial properties. E.G. Retail commercial properties usually sell on a different yeild than Office which is different again to Industrial. So you need to determine what class of commercial property you are looking at. You also need to know whether the property is tennanted or not as commercial properties that have a quality tennant usually sell at a lesser yeild (as the risk to the investor is reduced).
Cheers,
Nathan.
I went to a property investing seminar on the weekend and one of the speakers was Melanie MacDonald a commercial property investor. One interesting point that she made was that a valuation on a commercial property will always be lower if the property is valued while vacant. This is due to the high vacancy rates in commercial property. So check whether the property is/was tenanted or not when the valuation was done. If it was tenanted then I would suggest to find out how long the current lease has remaining, if the current tenants intend on moving and what the lease details where (will they take their fitout or not?), as you may have some negotiating power if the commercial property is now vacant.
She said that you can also get a commercial valuer to conduct a valuation on a commercial property and the recent price she paid for a commercial valuation was $1000 per $1,000,000 of property value (Melbourne). I know it seems like a lot but I suppose you would spend a similar ratio of money to get a residential valuation done and there’s not as much money at stake probably. Better to know that you’re paying as close as possible to the market value.I went to a property investing seminar on the weekend and one of the speakers was Melanie MacDonald a commercial property investor. One interesting point that she made was that a valuation on a commercial property will always be lower if the property is valued while vacant. This is due to the high vacancy rates in commercial property. So check whether the property is/was tenanted or not when the valuation was done. If it was tenanted then I would suggest to find out how long the current lease has remaining, if the current tenants intend on moving and what the lease details where (will they take their fitout or not?), as you may have some negotiating power if the commercial property is now vacant.
She said that you can also get a commercial valuer to conduct a valuation on a commercial property and the recent price she paid for a commercial valuation was $1000 per $1,000,000 of property value (Melbourne). I know it seems like a lot but I suppose you would spend a similar ratio of money to get a residential valuation done and there’s not as much money at stake probably. Better to know that you’re paying as close as possible to the market value.
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