Investing in commercial property can be a very self-sustaining and lucrative venture. Many people are opting for investing in commercial real estate toreap the benefits this industry has to offer. One crucial part of making money by commercial real estate is to buy a commercial property and sell it after the value has appreciated. This involves both buying and selling a property for which you need to master the skill of valuating your property in order to make a profitable transaction.
Calculating the value of a commercial property is not as straightforward as assessing the value of a residential property- the prior can be pretty intriguing. With residential areas, the value is determined by the condition of the home itself, compared with houses of similar sizes in the same area. But with a commercial property, there are many other details including the condition and the size which have to be considered before ascertaining its value. Comparisons can still be used to estimate the price but the following aspects are principally considered to calculate the market value of a commercial property:
Market area of the property
A commercial property that is situated in a prime location, within the city limits and with good transport accessibility will obviously be more worthy as compared to the ones that are farther from the city center and harder to reach. A centrally located property is priced higher because it is easy accessible by customers, employees and suppliers, increasing its market value.
Potential for rental income
This is another very important factor that determines the market value of a commercial property. A good location will attract more tenants, making the property more valuable. The capacity to earn profit from the property interprets into a higher market value. This factor is highly dependent on the first point. Location plays an important role in attracting tenants, hence increasing the market value of your commercial property.
Availability of a similar property in the same area
Finally, the market value of a commercial property is determined by considering how many other similar sized properties are available in that area. If there are many, the price of your commercial property will be lower. But if a property offers more features than the others, like a better view or more space, it’s worth will be much more.
Learning the way commercial properties are valued can help you in pricing your property or investing in one too!