Office Building Analysis

[Tony Nguyen]

An investor has a building that I'm trying to evaluate, but can't determine which method to go by. Here are the numbers;

Actual Gross Inc $69,600.00
Actual Expenses $(16,224.00)
Vacancy (10%) $(6,960.00)
NOI $46,416.00
Value @ 8% Cap $580,200.00

The way she got this income is because she leased out each individual office suite to individual tenants. This office building is set up like a regular, 2 story house with 4 bedrooms and 2 baths so everyone is sharing common areas.

The part where I am unsure of is if you take this same property a mile away (multiple comps actually), it's leased to just 1 tenant and @ only about an NOI of $27,000 per year, which at an 8% cap will put this property at about $337,500.

I personally would only evaluate it at the 337k number just because I'm conservative, but I just wanted to see what some other investors think. I would only give it a value of that because if all 4 tenants left, the normal "market" would only allow the lower number. Again, just a thought and looking for others opinions - thanks!!