COMMERCIAL PROPERTY VALUATION CALCULATOR
Calculate the value of your Commercial Property based on the income stream of the property. As a general rule of thumb, commercial banks & valuers will use this method to value a commercial property. Enter your gross monthly rental, your expenses, the CAP rate for your area and calculate the value. Adjust the percentage CAP rate as necessary.
Gross Monthly Rental = Base Monthly Rent + Parking Rent + Storage Rent + Any Recoveries charged to a tenant etc.
Operating Expenses = Rates & Taxes, Operating Costs, Insurance, Maintenance Costs etc.
Nett Rental = (Gross Monthly Rental of a property less the property’s Operating Expenses).
CAP Rate = The cap rate is the nett operating income of the property divided by its current market value (or sales price). Each area where a commercial property is located will have its own cap rate typically calculated by valuers based on previous sales in the area. What is the cap rate actually telling you? One way to think about the cap rate is that it represents the percentage return an investor would receive on an all cash purchase. I.e. If the property is purchased for a cash the cap rate would represent a % of the annual income of the property.
For a more detailed discussion on Commercial Property Valuation click on the following link to read an in-depth article about the subject or contact one of our Commercial Brokers