Commercial Real Estate, Property Valuations A Step to Good Decision Making

Determine and Compare Your Return on Investment (ROI)

Value, growth, and quality are factors that many investors take into consideration while evaluating possible investments.

Cost , Relative Value (Matrket), and Dioscounted Cash Flow

Cost Approuch: Cost to build (Orginal Cost to Build), Replacement Cost (todays cost to build),

Market Approuch, compare wiith other properties, previous sales price (adjusted to future value)

Discounted Cash Flow: Forcast future cash flow plus the interest (return) the the monies could have, would have earned then analysed for present value

CMA, Comparative Marrket Analysis

Future Value is Driven by Information

Assuming company growth, will this property be of use.

The Cost Approach

Costs to Build New Comparisons

The cost approach. compares the existing building to the cost of new construction.

The comparative unit method: comparing the cost of the square foot construction, comparing different construction materials and methods

The segregated cost method

The unit-in-place method

The quantity survey method

The Income Approach

NOI = Effective Gross Income – Operating Expenses

Cap Rate = NOI / Value

The Gross Rent Multiplier Approach

Property Value = Annual Gross Rents x Gross Rent Multiplier

Valuation is Driven by Multiple Comparative Approuches

After using multiple methods to detremine value the results would be compared. A average of sorts would suggest the value of the project. Then this will be compared to other possible projects translating this to ratio for easy comparison Cost / Earnings = Ratio, plus cosidering the sales value of the property, Additionally estamating risk or and probalility, thus detremining where is the best place to place monies.