Carleton Sheets talks about using the rents to determine the price of a apart. bldg. but does not give any formulas. Does anyone know how you determine value with the remts?
Thanks
Marlon
The short-form formula I have been using to scout neighborhoods, told to me by a seasoned realtor, is essentially:
The sum of the monthly rents is roughly 90% of the purchase price. Less a zero, of course.
As I said, that is the short form. If you are selling the Bldg, or placing a bid on the Bldg, you would need to work out the exact rental rates, if you can raise them and to what (comps), common area values (furnace room, parking lot, and pool), and whether the property will appreciate and at what rate. If you like numbers you can work it out to a square foot dollar amount. Which makes things a little faster when speaking to commercial realtors and property managers regarding multi tenant properties.
Have fun!
Thanks. That helps a lot.
Marlon