Analysis of mixed use property

[Dennis Tierney]

I need help trying to figure the value of the commercial side of a mixed use property. It is a rehabbed school and I can figure the apartment side, but, I have no experience on how to value the commercial spaces. They are 3 offices rented to a tax preparation business, a psychologist, a religous based family services organization. There is also a preschool and they rent out the gym for weddings, meetings etc. The leases are to run 1-2 yrs more. The tax guy and preschool pay their own gas/electric. The total rents are about $32,000/ yr. (including the last 6 yr average on gym rental).

[Joel Owens]

The leases that are running out soon is the rate current market or not??

What I mean by this is many places have vintage start dates for leases during the boom times 2005,2006,2007.The tenants have just been paying it.When the lease comes up the new market rate might have dropped 25% from what is being collected now on the current lease.

So your income numbers might drastically change soon after you buy it.

You would have to read each lease carefully to look for hidden costs built in to properly evaluate the whole project.