What are we seeing for values? Lease & Cap rate

[Taylor Witt]

I am currently evaluating a deal but I only have experience in valuing and owning apartment buildings.  Below are some more details and a few questions.

PROPERTY/LEASE
-rural Minnesota town (around 5k people population)
-built in 1974
-property is in good condition, right on the main street
-10 units ranging in sqft
-1 unit on a 3 year lease, 7 are on a month-to-month lease (not sure how long they've all been there), and 2 are vacant (yearly rent for these 2 open units combined would be around $22,000)
-there is room for about a 5% increase in fair market rent for the units on a month-to-month lease
-the expenses paid by the owner are taxes, insurance, utilities, snow removal, cleaning the common areas and minimal maintenance
-yearly rent $133,560
-yearly NOI of $103,447

QUESTIONS
-what are people seeing for office/retail CAP rates?
-how much should the value be affected based on a majority of the leases being month-to-month?
-what would YOU pay for this?


I know I just gave some high level details, but any help would be appreciated.

[Joseph Gozlan]

@Taylor Witt the most critical thing I'd try to figure out is how long have these two spaces been vacant. A small rural town could mean it takes years to fill up a space and while 10% might sound great for the current numbers, lose 2 tenants and you're under water. 

Make sure to stress-test your underwriting at lower vacancy to figure out where's your break-even point.