Mixed Used Commercial / 1 apartment & 1 store how to price?

[Frank Fiallo]

Hello All, This property is commercial with only two units. One rental and one store 850$ and 1500$ monthly rent respectively . The owner asked me to price it for him but I'm not sure if I am doing it correctly. I calculated the NOI and divided by 8% cap rate. To me it doesn't even seem like it's a commercial property because of it relatively small size and actually I should just use comparables. Not sure what should I use.

[Kathy Henley]

@Frank Fiallo In general, one finds the value of residential by the rents and a commercial space by its return per square footage, and then the two figures are added together for the mixed use building.  In your case, the owner asked for you to come up with a value, so please oblige him.  What price would you agree to that the income from the property would cover the expenses and give you the return to satisfy.  You will be tying up your capital for a few years in this investment, what kind of return makes it a good deal?