If you are getting ready to invest in commercial real estate in Oklahoma, understanding property valuation is essential to your long-term success. Real estate property valuation establishes how much a property should cost and if it is worth your investment.
Commercial Real Estate Valuation Methods
Different real estate valuation techniques help pinpoint commercial property values.
One way to establish commercial property values is through the rentable square footage. This method allows you to compare the cost of an average lease per square foot with the cost of the rentable square foot space, establishing the gross rental yield. The higher the rent is per square foot, the more a building is worth.
One of the more unique commercial real estate valuation methods is cost. This method takes the cost of rebuilding along with the value of the land and structure. It is used when comparables are difficult to find, or the upgrades are specialized and might improve the land’s value.
This market approach finds real estate property valuation by using the data from recently purchased properties that are comparable in size and condition as well as location. Sales comparison helps to establish the fair market value. Commonly used with residential properties, market conditions may not always be available for commercial properties.
Of the different real estate valuation techniques, this method relies on projecting the income that a specific property can generate. The amount of expected decrease in maintenance, along with the revenue generated from comparable properties, establishes the valuation.
GRM or Gross Rent Multiplier divides the price of the property by its gross income. The method is best for properties with a lower value that relative to the market-based income potential.
These valuation methods are helpful if you are ready to invest in commercial real estate in Oklahoma. To get the most out of your investment, however, consider working with a commercial real estate broker. An experienced professional has the knowledge to bring you the best return on your investment. Please contact us with any questions; we are more than happy to answer any questions and help you find the ideal investment.