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Number21

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Posts: 75
Reply with quote  #1 
Long story short, I want to buy a piece of commercial property with a few buildings and a house. Some of the spaces are already rented and it generates income for the owner. I know what the property is worth from a real estate point of view. But how do I put a value on current tenants? How do I come up with a fair offer?

The property isn't technically for sale but I know the owner and I know he's tired of dealing with it.
NoNonsenseLandlord

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Posts: 178
Reply with quote  #2 
The tenants are worth nothing, their rents are.

An appraisal is needed.  The income approach can be used.  Or just make an offer.

I look for a 15%+ return.  That is, 15% return after all expenses and debt service is paid.  Commercial property is more risky than residential.  Vacancies are less often, but are longer.  And commercial tenants go broke more often too.

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