Warehouse, how do you comp? Cap rate?

[Kevin Parekh]

I have the opportunity to buy a 15,000 sq ft warehouse from a failing business. Right now it looks like the owner will QCD (I can get a Warranty Deed, if needed) and get it at a great price... I think.

I have a lot of residential properties and excellent at comping them. 

As for this property, the business hasn't made any money in years and I wont be able to get the NOI. I do not know where to get the cap rate. And of course, I really don't know the value. SOOOOO I dont know what the value is.

Can someone point me in the right direction?

[James Storey]

Hey Kevin,

It sounds like you are buying a property direct from a business that operated out of their own real estate. If that's the case, the property would be considered an owner occupied property and not an investment property from a value standpoint which means a CAP rate won't apply in this circumstance.

From a value standpoint, owner occupied property is valued on a per SF basis. You will want to find property in the area that have sold in the last 18 month that is similar and average out a price/sf to apply to this property you are buying. 

If you want to look at an ARV from a future potential investment value from you renting it out, then you would need to find rental comps as well as investment sales comps to go with that rent to project a value off of NOI.

It's going to be hard to pull comps without some sort of data source like Costar or Crexi or Real Capital Analytics. But you can start by looking at what is on the market on Loopnet and compare them to your property. It won't be real comps though because Loopnet is active properties and not sold properties. The other way is by connecting with a broker and have them help you comp everything out if they are willing to help.

James Storey, CCIM