Evaluating Commercial Property
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There are many different methods Joseph Dodge uses to evaluate the value of Southern California Commercial Property. Three of our most common methods used for determining the value of property include the following:
Replacement Cost Method
As the title implies, this is the method of
evaluation that estimates the cost to reconstruct a replacement to the existing structure. It takes into account the cost of materials, labor and the current wear and tear (depreciation) on the current structure. This is very effective for evaluating a newer structure that has constructed and has very little depreciation.
Sales Comparison Method
This method is commonly referred to as the "Market Approach" and is the method that analyzes prices paid for recent sales of similar properties in normal market conditions. Adjustments are made to valuations based on positive and negative characteristics of the similar properties as compared to the subject property.
Income Capitalization Method
This method is the process of estimating the value of a property by discounting the value of all future net income from the property. This method is commonly used for property considered for investment purposes. The 2 key variable sin this analysis are how accurately one can predict the future net income by taking into consideration the variables of rental rates, vacancy, taxes, related expenses etc. as well as the current cost of capital of the investor.
Commercial Real Estate Investing Methods
To see more on the methods we use to determine if a Southern California property is a good investment or not, please visit our real estate investing page.
Your Commercial Real Estate Broker
If you have any questions regarding Southern California commerical real estate, please contact Joseph Dodge today. As your Southern California commerical real estate broker, you can be assured that we will always look out for your best interests. Please call or email today, and we'll be happy to assist you throughout your real estate transaction.