How to value a property?

happy_knome

in this instance , commercial

their are so many agendas out there and their is no such thing as an honest auctioneer so how do you accurately value a property

is it on a sqr foot basis
is it yield ( rent over cost of purchase )
is it adress

The_Conductor

For commercial property- value it based purely on yield.
Normal yield- depends on location.
Assume a central Dublin location is 8-10% and radiate outwards and downwards.......

happy_knome

The_Conductor wrote: »

For commercial property- value it based purely on yield.
Normal yield- depends on location.
Assume a central Dublin location is 8-10% and radiate outwards and downwards.......

yields are higher outside dublin ?

The_Conductor

happy_knome wrote: »

yields are higher outside dublin ?

Depends entirely on location- but asking prices in Dublin may have recovered to a far greater extent than elsewhere- and rental yields not fallen as much. Break clauses have been used particularly by commercial tenants, nationwide- to renegotiate better terms- sometimes for a fraction of the previous rents. This has not happened to the same extent in Dublin. So- counter intuitively- yields may actually be better in Dublin. However the flipside of the coin- supply is far more constrained in Dublin- which means prices are higher..........

Either way- you need to sit down- know what terms are on offer to an investor and the tenants, whether break clauses exist, where they do locally- how this has effected the rental yield on other commercial properties- and number crunch the different scenarios.......

A small retail unit in a provincial town- might be very attractive when you crunch the numbers- while it might not make sense in a larger urban conurbation..........

Swings and roundabouts- you need to gather information indiscriminately- and evaluate worse case scenarios, alongside various scenarios.

A yield in the 8-10 or even 12% range- is being achieved by some investors at the moment- I would argue that this is not normal- and that a historic ROI of 6-7% would be more normal, and should be considered as such in your calculations.

Also- plug a deteriorating regulatory and tax framework into your sums.......... look at whats coming down the line............

happy_knome

The_Conductor wrote: »

Depends entirely on location- but asking prices in Dublin may have recovered to a far greater extent than elsewhere- and rental yields not fallen as much. Break clauses have been used particularly by commercial tenants, nationwide- to renegotiate better terms- sometimes for a fraction of the previous rents. This has not happened to the same extent in Dublin. So- counter intuitively- yields may actually be better in Dublin. However the flipside of the coin- supply is far more constrained in Dublin- which means prices are higher..........

Either way- you need to sit down- know what terms are on offer to an investor and the tenants, whether break clauses exist, where they do locally- how this has effected the rental yield on other commercial properties- and number crunch the different scenarios.......

A small retail unit in a provincial town- might be very attractive when you crunch the numbers- while it might not make sense in a larger urban conurbation..........

Swings and roundabouts- you need to gather information indiscriminately- and evaluate worse case scenarios, alongside various scenarios.

A yield in the 8-10 or even 12% range- is being achieved by some investors at the moment- I would argue that this is not normal- and that a historic ROI of 6-7% would be more normal, and should be considered as such in your calculations.

Also- plug a deteriorating regulatory and tax framework into your sums.......... look at whats coming down the line............

my definition of yield is as follows

retail unit in dublin = 300,000 to buy , with a rent per anum of 21 k , yield = 7%

retail unit in ennis ( or any large provincial town ) = 120 k to buy , with a rent per anum of 12 k , yield = 10%

yield is lower in dublin because the purchase price of the property is higher in dublin to begin with so im struggling to figure out why you reasoned that you work downwards outside the capital

happy_knome

10% is the best i can get right now and unless you have more than 300 k to spend , you certainly cant get higher than that in dublin

ive 120 k to spend but its my own money