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Did you know that commercial property values are down 7% from the past year? Or that industrial and multifamily properties have a larger share of investment than offices?
These are all essential pieces of information that can make or break your commercial property valuation accuracy. The last thing an investor wants is to buy an expensive commercial property only to find out that there's no market for it. Alternatively, they may miss out on an opportunity because it doesn't look exciting in their portfolio.
Here's how you can master property value assessment and start making more profit.
Conduct a Property Market Analysis
One of the first things any commercial property owner should do is understand their market. Perform a detailed market analysis of the area. Find out about current market trends, property values, and the economic outlook.
These factors will help you determine which properties are worth investing in and what you might want to do with them.
Look at Comparable Sales
Real estate valuation tips often include looking at comparable properties in your area. More specifically, look at recently sold properties to estimate what your property will be worth.
Of course, investment property worth will also vary based on its condition, location, and other features. It's also likely to change if you wait too long to buy or sell.
Understand Zoning Regulations
Commercial properties include a wide range of uses from construction to retail. As such, what you can do with your property will depend on zoning laws. Different zones allow for different types of development, which can either help or hurt your property's value.
One of the investments that has seen consistent rental growth is retail spaces. These continue to see steady performances despite the growth of work-from-home trends.
Depending on the zoning, you may also want to consider opening up an apartment complex for passive income.
Consider the Cap Rate
The capitalization rate indicates the rate of return you can expect from your investment. It's expressed as a percentage, and you calculate it by comparing the net income against the property value.
By calculating the cap rate, you can get some insight into whether or not you should purchase a commercial property. It does not take into account future cash flows, though.
Account for Future Developments
Atlanta is a rapidly developing city with numerous upcoming infrastructure projects. As such, the value of your commercial property may fluctuate based on what changes around it.
Consider upcoming developments in your area, such as new public transportation lines or commercial hubs. See if your property will benefit or suffer from these developments.
Easy Commercial Property Valuation
Accurate commercial property valuation is important for every step of the investment process. It lets you know if a property is worth the purchase, as well as how much you can rent or sell it for. Misvaluing your property could lead to poor investment choices and a loss of potential income.
PMI Perimeter provides property management services for property owners in the Sandy Springs area. We're part of a nearly 20-year-old franchise that has changed the landscape of this industry. Schedule a consultation today to learn more about how we can help you.
