Wholesaling vacant commercial property

[Hamidah Bee]

Good evening BP,

I have buyers that want commercial properties in a particular area, I need to know whats the best way to valuate commercial properties?? a lot of times there are no comps in the area and some of what im finding are complete teardowns. how do I best assess the value??

Hamidah A.

Principal, 

Brookstone Investment Group LLC

[Account Closed]

the only way to value commercial properties is by their existing or projected income. Then subtract all the expenses then you end up with NOI (Net Operating Income). Then you find similiar properties that have sold in the area and find out what their cap rate is. Then simply do the math: NOI/Cap rate % = Value

An example is you have a property making $100,000 in NOI and the local cap rate for that type of property is 10%. Take $100,000/.10 = $1,000,000.