Valuing a property during a refinance (11 Unit)

[Nick Liddell]

Hello everyone,

I am in the process of getting ready to go to the bank and refinance a commercial property (11 unit) that we fully renovated top to bottom and leased up. I have all the numbers on the property but am wondering what expenses the bank takes into consideration when valuing a property? Some line items I am unsure of are maintenance, management, vacancy etc. or any others I may be missing. Here are the numbers on the property in my current underwriting:

Gross Rent:

11 Unit Building

(1 First floor commercial space + 10 apartments):

$10,258 x 12 = $123,096 per year

Expenses

Taxes - $7800

Insurance - $3049

Water/Sewer/Trash - $7200

Maintenance-- $5,914 ( we do not know the maintenance cost so I estimated 5%) Is that high considering the building was just fully renovated?

Management- 6%- $7097 6 percent is what we currently pay our property management company.

Total- $31,060 per year

NOI- $92,036

Also, does the bank use cap rates or comps when determining the value? The building is located in a great area but I do not know of any buildings of this size that have been fully renovated and sold in the past several years. I am just trying to get a better of idea of what the building will be valued at.

Appreciate any input, Thanks!