What Goes Into Commercial Property Evaluation?
harkins / May 5, 2020
When someone is evaluating a commercial property, such as Sanford commercial real estate, a few factors are going to be involved. One of the most important factors is always going to be the location. Even in commercial real estate in Orlando, this plays a critical role. Some of the factors that could play a role in the location include the safety of the area, the distance from major transportation arteries, and the proximity to a major city. The more valuable the land is, the more valuable the commercial buildings for sale are going to be.
Sales Comparison Approach
When it comes to evaluating commercial real estate for sale, many professionals use the sales comparison approach. This involves taking the current commercial property for sale and comparing it to other similar commercial buildings for sale. Because these properties are similar, they should be similar in value as well. This is how some real estate agents or firms will calculate the value of the commercial real estate.
Gross Rent Multiplier
Another important evaluating commercial real estate for sale involves the Gross Rent Multiplier (GRM). In this method, the property’s potential value is calculated by diving the price of the property by its gross income. This is particularly important for those considering a commercial real estate lease, as this is going to impact the income someone might be able to make off of the commercial property. This method is helpful to those who are looking to buy commercial real estate that might be undervalued relative to its potential market income.
These are a few of the most popular ways that someone might evaluate a commercial space for lease. The real estate market is going through an uncertain time right now; however, this is also a time of tremendous opportunity. If you’re looking to get into the market, give us a call today at (407)-323-9310 to see how we can help or contact us online here!
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