Posted by Rob on July 18, 2002 at 17:07:53:
Thank you all for all of your help and info. I am in Memphis, TN.
Thanks again,
-Rob
Comps on Apartment Buildings… - Posted by Rob
Posted by Rob on July 18, 2002 at 11:46:32:
Hi, I’m trying to find out where and how I may be able to get recent sales comps on similar apartment buildings in the area in which this prospective investment property is located. It is a “pocket listing” of the selling agent. Would it be unacceptable to ask her for comps, even though she is the agent who is representing the seller, not me, the buyer? The building appears to be below market, but I’m not familiar with the per unit prices in this region. Any ideas?
Thanks, Rob
Re: Comps on Apartment Buildings… - Posted by ray@lcorn
Posted by ray@lcorn on July 19, 2002 at 11:00:52:
Rob,
The posts below are correct in that comps are not as important as is the operating data from the property. I would stress that you get the actual operating data and not accept a pro forma projection of income and expense. There can be a huge difference in reliability and the subsequent valuation.
You might also want to read my article on performing commerical property due diligence in the how-to articles section of this site. The direct link is http://www.creonline.com/art-148.html
Also, search the archives on the commercial real estate forum here at CRE Online for posts on valuation.
ray
Valuing commercial property - Posted by John Merchant,JD
Posted by John Merchant,JD on July 18, 2002 at 15:34:51:
While comps are very helpful in SFRs, on commercial, income property, the more useful gauge and measure is its income. Its NOI to be precise. Net Operating Income, after all expenses.
And from its NOI, one can then determine its CAP rate (capitalization rate) to hone in closer on its real market value.
A great little book on this topic, by a very savvy commercial Broker, is: The Income Stream, by Robert Goodman.
Don’t know if it’s still in print, but I have the '98 edition from Brookstone Pubs. S. Padre Island TX78597.
Re: Comps on Apartment Buildings… - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on July 18, 2002 at 14:24:31:
Rob----------------
You don’t indicate where you are. If you are someplace for which First American Real Estate Solutions offers assessors roll information, you probably will be able to easily get comps. Here in CA, they have their commercial and industrial database with gobs of information on apartments.
You might also check with title companies about getting apartment house comps. If you are where title companies provide good services.
Good InvestingRon Starr*******
Re: Comps on Apartment Buildings… - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on July 18, 2002 at 12:46:10:
It doesn’t hurt to have the agent’s comps; but you still want to review your own comps. But as it is an apartment complex, you are going to have to calculate the income and expenses of the building(s). You want to know what the seller is claiming as income and expenses and determine if they fall in line with what you expect in a return on your investment. Make sure things as simple as vacancy rates and property management are included in your overall numbers. While you may not want to pay a property manager, your later sell might have a buyer who will want a PM and they will take that figure into account with their review of the financials.
Get the numbers from the agent, then verify and work those numbers to see if it is profitable to you. If not, find the number that does make it profitable to you for your investment committment.