How do you find the value of a vacant property with no comps?
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[{"id": "gapu0bz", "text": "Extend the search distance. Technically it can be comparable location so long they are all in same state.", "replies": [{"id": "gaq0ohm", "text": "Technically, there is no appraisal rule about them being in the same state. Some particular client could make this an arbitrary rule, but I tend to see that more in residential markets. Many border cities like Kansas City could reasonably have comps from just across the border, and other properties could compete much further but still in the same state.", "replies": [], "depth": 2}, {"id": "gaqs7sh", "text": "State doesn\u2019t matter. Market does.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gapu2fp", "text": "That is the job of appraisers or realtors.", "replies": [], "depth": 1}, {"id": "gapwr8a", "text": "Income-expenses / cap rate = value. I\u2019m simple terms.", "replies": [], "depth": 1}, {"id": "gapybfp", "text": "Try the tax assessment records to see if they value land and building separately.  See how they value adjacent land and make adjustments accordingly.  Tax assessment is often imperfect but at least it\u2019s a data point instead of pure speculation.", "replies": [{"id": "gaq1mot", "text": "The assessed value basically only kept up with inflation. Most property in this area is like that.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gaq0zmw", "text": "Option A is to broaden your search for comps. Go further back in time, more distant, or less physically similar.\n\nOption B is to use the $195,000 price in 2002, but that's pretty weak. Given how long that was and that there was that recession, it's not really helpful, though maybe sets a floor for your analysis.\n\nOption C is to consider the income. It grosses $3,500/month. What income multipliers are in your market?\n\nOption D is to consider what the land value is. The land value may exceed the value as improved.", "replies": [], "depth": 1}, {"id": "gaq4t4i", "text": "You are looking at commercial property that will bring you 42k a year, why don't you pay an appraiser?", "replies": [], "depth": 1}, {"id": "gaq8brr", "text": "Put a bunch of numbers on a dartboard like most brokers, then take your shot.", "replies": [{"id": "gatk2p2", "text": "Make sure it ends in 999999", "replies": [], "depth": 2}], "depth": 1}, {"id": "gaqctec", "text": "Across the border is distance related. Indiana vs Illinois. Kans vs + MO.  Income approach is another method. $/sf NNN.  $3.5/sf is a lot of money. I am in SFBA, Northern CA.\n\nThanks", "replies": [], "depth": 1}, {"id": "gaqsfxu", "text": "Take that gross income, subtract vacancy, subtract all the expenses the landlord would need to pay, that\u2019s your net income.  Ask a cash investor what return they\u2019d need to consider buying it, that\u2019s a discount rate.  Subtract the expected annual appreciation from the discount rate, that\u2019s a cap rate. Divide the net income by the cap rate. That\u2019s a value.", "replies": [], "depth": 1}, {"id": "gaqyxp3", "text": "Another option would be to determine the highest and best use of the land and complete a land residual analysis.", "replies": [{"id": "gar71z4", "text": "Other than hiring an appraiser, this is the best answer. In fact I\u2019d probably run the residual land value analysis and hire an appraiser.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gardmwd", "text": "$3,500 net? Cap the income. $42k/yr at a 6% cap is $700k - you have to subtract the property tax at the sale price to be real about this. I don\u2019t know your market, so can\u2019t tell you the normal market cap rates - just run a survey of no-credit investment sales in the area in the past 6 months.\n\nEdit - you can cap the income on a pro-forma basis. You can cap anything, the % will be higher as a function of risk.", "replies": [{"id": "gas7os7", "text": "True if it were occupied with a long term remaining on the lease, but this is vacant", "replies": [{"id": "gasjsa6", "text": "Pro forma then... what\u2019s the $3500/mo based on? Isn\u2019t that supposed the be the pro forma? It\u2019s not clear to me who the likely tenant is for 1k SF land.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gaxfz6j", "text": "Going to have to run a DCF. I would also look comps in similar markets, if there aren\u2019t any in your market.", "replies": [], "depth": 1}, {"id": "gb2mzzs", "text": "You've got piece of property that's going to generate $3.50/sf/mo in an area with no comps? That just doesn't jibe.", "replies": [], "depth": 1}, {"id": "gb8ixe2", "text": "i would start by taking your lease amount then calculating a years income. now multiply that by however many years for a loan.\n\nnow would someone buy that property and be willing to lose money?\n\ncan compare that price to nearby sales. could compare $/sqft. it's hard to quantify location and proximity.\n\nalso the current owner, how much money would they get? most people don't care about a few thousand dollars if they're already getting a decent surplus. they just want it sold.", "replies": [], "depth": 1}]