EPISODE 009:
Part 2 of 2: Residential & Commercial Property Values & How to Change Them

Categories:
Strategy & Tips

Description & Show Notes:
In this episode, we focus on Commercial Properties: how they are valued and 3 ways to increase their value as an owner.  We look at the ways that the Net Operating Income (NOI) and Cap Rates work together to determine the value of a Commercial Property, and easy ways that  you as an owner can improve both of them to have a major impact on the value of your property in just 2-3 years.  There is a simple recipe for success in this part of the Real Estate Investing world, and I'll introduce it here.

The 2 Components of Commercial Property Valuations:

• Net Operating Income (NOI):
  • Take all the income and subtract out all the costs associated with running the property.  (usually everything but your loan payment)
  • This number is a FACT.
• Cap Rate:
  • The desired return a new buyer would want (or need) to get if they are buying a property
  • This is an OPINION.

The Value of a Commercial Property is found like this:

• NOI / Cap Rate = Value
• $100,000 per year / 8% return = $1,250,000
• 100,000 / .08 = 1,250,000

Commercial Property Quick Tips:

• Renovating the Management is easier & cheaper than renovating the "property" itself
• Give yourself 2-3 years to implement your plan on an apartment turnaround and longer for retail or office spaces  

Links from this episode:

• Real Estate Brokerage Services: AuburnInvestmentProperties.com
• Real Estate Investor Coaching: BetterREI.com​

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Hosted by:
Chris Kearns
- Investor, Broker
- 2x Auburn Grad

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