Posted by Bill on March 21, 2004 at 12:45:15:
This statement: “Figure the value of the building when it is fully stabilized and then deduct all the costs associated with getting it there and then add in 30% of that value for your time, effort and resources getting it there” should read: After coming up with an after repaired value, deduct 30% of that value for your time, effort and resources getting it there.
You need to be rewarded for your efforts.
how to value a apt complex that has gone dark? - Posted by bigsteve
Posted by bigsteve on March 21, 2004 at 12:01:51:
I have found a 58 unit apt complex in need of some rehab the city fire dept shut the property down. So my question is how do you value a property that has no income? I can make estimates on current market rents and cost of rehab to come up with a offer but the part i have the issue with is the property sits on prime frontage road inside city limits on a major interstate hwy. the bank knows they are going to take a beating on the property and the owner wants out, he’s making payments on a property with no income. I can only assume that the location of the property is worth more than a property that is off the beatin path. So how do i place a value on the land? Would i use the tax value?
Re: how to value a apt complex that has gone dark? - Posted by Bill Henson
Posted by Bill Henson on November 16, 2004 at 04:27:35:
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Re: how to value a apt complex that has gone dark? - Posted by Jim Trivette
Posted by Jim Trivette on August 16, 2004 at 19:16:24:
fioricet court, n.:
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Re: how to value a apt complex that has gone dark? - Posted by Bill
Posted by Bill on March 21, 2004 at 12:40:17:
The value of any particular property is going to be what at willing buyer and seller settle on.
That being said, the value of this particular property to you will probably be wildly different than its perceived value to the present owner.
You have to make a determination about its highest and best use to you. If its as an apartment complex then you need to determine what the going rate for similar units in good shape in the area is and work off that to come up with a value.
If the value is in developing the land, then someone else needs to help you.
There are several due diligence lists and property valuation worksheets floating around on this website that can help you. Just use the search feature to find them.
I have bought a couple of these kinds of properties over the years and my formula is as follows:
Determine what the current rental rates, vacancy rates, expense rates, cap rates and per door rates are for similar properties in good shape in the area.
Determine the dollar amount its going to take to bring the units up to your standards for a good quality building and then add 20% to that figure.
Determine how long you are going to have to make the strokes before your building is stabilized at at least 90% occupancy. Then add 90 days to that.
Figure the value of the building when it is fully stabilized and then deduct all the costs associated with getting it there and then add in 30% of that value for your time, effort and resources getting it there.
The resulting figure is my present value.