How to Value Commercial Real Estate [The 4 Main Ways]

[@eronforseth8325]

Hey Brother thank you for the advice.

[@TylerCauble]

Absolutely, Eron!

[@shawnemployee6906]

When using sq footage to calculate the value, do you use the sq footage of the lot or of the building?

[@TylerCauble]

If there’s a building on the property that can be used, then it’s based on the building. If it’s raw land, then you’ll use the square footage of the land.

[@shawnemployee6906]

@@TylerCauble but if theres a building and you use only the sq footage of the building and not the land, arent you not taking the land into account for the value?

[@TylerCauble]

@shawnemployee6906 no because if you’re doing the valuation based on comps, then you’ll get the right price. You can always break it out and do the value of the building and the value of the land but it’s often blended.

[@cheodyfortunato1703]

Very informative, thanks!

[@TylerCauble]

Glad you enjoyed it!

[@shawnemployee6906]

2:11 where do you get the purchase price from? what the original owner bought it for or what the realtor or owner wants to sell it for?

[@TylerCauble]

Could be any of the above or the value that you put on it by doing your due diligence / studying the property

[@docimma]

Tips for valuation of unique properties like treehouses and international beachfront?

[@TylerCauble]

I would look at past financials and underwrite to a cap rate that you feel comfortable with. There won't be enough comps out there to really get a good feel and since they're unique, they'll be a bit more risky

[@griseldaorozco7569]

Can you do a video of you doing a CMA on a commercial property on the MLS.

[@TylerCauble]

I actually don't have access to the MLS since I'm not a Realtor

[@graykuglen7054]

Do you receive financial compensation from CRS data to mention their products?

[@TylerCauble]

Haha I wish! It’s a product that we actually use

[@shannonp3640]

Great Video! Well explained. Thank you

[@TylerCauble]

Glad you liked it!

[@ahmadalshakargi4093]

What would you say is the average desired cap rate for investors in the case we're looking to flip an abandoned commercial space into retail plaza and lease it and sell it?

[@TylerCauble]

It’s tough to say because it depends on the market, the condition of the property, the income and the vacancy that it currently has, and so many more factors. If you get all credit tenants, it could be 5%, if you do all local and still have some vacancy it could be 7%. Unfortunately, there’s no easy way to determine that unless you have a plan in place

[@francisfallon]

Well done

[@TylerCauble]

Appreciate it

[@TylerCauble]

Wondering how to value a specific property? Leave me a question below!

[@kentheengineer592]

Tyler Cauble how is price per square foot determined?

[@TylerCauble]

Kenneth - price per square foot is determined by the supply and demand within a market. Best way to determine the going rate on price per square foot in your area is to find vacant properties that have recently sold that are similar to what you’re looking into and you should get an idea of value from there!

[@azink777]

I'm in Nashville ! Do you consult people on best building to build on commercial land? If so, how?

[@TylerCauble]

Hi Adam - yes, we’d be happy to do so. Please reach out to [e-mail]

[@leec136]

my only issue is understanding how to get the price per square foot so I can do the math??? what's the math on that when you have time... thanks

[@kentheengineer592]

annual net revenue for each floors or for all floors - total purchase price= cap rate

[@TylerCauble]

Divided by the purchase price, but yes! (Net Revenue) / (Purchase Price) = Cap Rate

[@williamgreenwood7574]

Great video - thanks so much for your insight!

[@TylerCauble]

Glad you enjoyed it! Thanks for watching, William

[@tonyk4236]

Is there a calculation for raising the appraisal value by raising the rents? For example, I bought an 8 unit building for 650k and all the rents were 850 and I raised the rents to 900? Does that correlate to a certain raise in value?

[@TylerCauble]

Yes - it absolutely does. You’ll want to apply the market cap rate for that type of product to the new NOI to see the value you’ve created!

[@hichamfarid6401]

Here we go, found the video. Thanks again Tyler ^^

[@TylerCauble]

hicham farid awesome! Hope that helps

[@MRTransactionEngineer]

Great info as always Bro! 💪🏾🔥

[@TylerCauble]

Appreciate it! Let's gooooo

[@josephstevsns9506]

I am about to close on my first commercial property, it is in a small city south of columbus ohio. I am having a hard time figuring out what to charge for rent. I can't find any similar buildings like this one for rent, it is a 1000 sqrf family restaurant/bar.

[@TylerCauble]

Congratulations! Have you reached out to local commercial real estate brokers in the area that are currently working on leasing assignments?

[@josephstevsns9506]

thank you for that advice, I was able to connect a local commercial broker and he said our local area is running around $10-$12 a sqft. I really appreciate you and I like your videos.

[@TylerCauble]

Happy to help anytime, let me know how the deal goes!

[@performancebasedheatingair8006]

Im an owner operator looking at potentially going from renting to purchasing.....We only use the property for storage. There is a place down the road from me that is for sale. Next to a homeless camp and almost burned up just this summer. High risk. Its 10,500sqft. Has 4 meters already so 4 different addresses or potential rental property. No one has occupied this location for years now. Primarily due to the homeless camp. Clearly I would need Large aggressive fencing, and security installed.....I know most would say heck no. But I see it as a way to drive the cost of the building way down....And we are not looking for foot traffic customers.....But I have no idea how to value this building. The location pretty much changes everything. And they is no other buildings that have sold by this homeless camp.

[@TylerCauble]

I would strongly recommend hiring a commercial real estate broker in the area to represent you in the deal. They would be able to pull comps in the neighborhood to show you what it's worth and ensure that you go through the due diligence process properly. Here's a video I did on the 13 questions to ask when interviewing a potential real estate rep: kzbin.info/www/bejne/nZS5lX-gfauBa5I

[@amodraj726]

Can you Please make the video on determining, studying different cycles of market and can you also provide us with different case studies of your investments that made your profits on? Loving your videos.. 👍

[@TylerCauble]

Hi Amod! We have a market cycles video in the queue! May be a little bit before we get to it, but it’s coming 😁 I’m happy to give a case study on one of my investments - we’re finalizing some updates on one now and once that’s done I’ll share it with you

[@AdamLeffler]

would we be able to schedule an interview

[@TylerCauble]

What kind of interview?

[@pamelameadows9993]

I have a question

[@TylerCauble]

I might have an answer

[@jacobmcgraw4303]

How do I price a church?!

[@TylerCauble]

That’s a tough one because they’re such unique properties. I’d look up church sales in the area and see how the comps shake out

[@TylerCauble]

I've just launched a FREE crash course on commercial real estate investing for beginners. Check it out at www.tylercauble.com/course