3 ways to value Mount Isa commercial property
If you’re a Mount Isa commercial property landlord, then it’s important to know how to value your property. Read on to find out all about the 3 most common ways to value Mt Isa commercial property.
Recent or current comparable sales
This is a very common method where you look at the recent or current selling prices of other Mount Isa commercial properties that have similar characteristics to your property.
For example, properties with similar business uses (or potential uses), and that are a similar size, age and condition to your property. These comparable properties will give you a good guide of current market values.
You can check out our range of current commercial property listings here, or you could contact one of our commercial property specialists at Jays Real Estate for an obligation-free chat.
If you can’t find a property that’s a similar size to yours, you could work out the average price per square metre of a recently sold or currently listed comparable property and then multiply that figure by the size of your property in square metres. Or talk to one of our team who will be able to provide you with advice.
The return on investment (ROI) method
This is technically known as the income capitalisation method in financial jargon. It requires you to use 2 figures to help you determine your property’s value.
1) The net annual income from your property.
(i.e., your tenant’s annual rent less any expenses that you are responsible for as a landlord – this will depend on the terms and conditions of your commercial property lease agreement).
2) The return on investment of recently sold or currently listed comparable commercial properties.
Once you have these 2 figures, you can use the following formula to determine your property’s potential value:
- Net annual income divided by the ROI of comparable properties = your property’s value.
Once again, one of our team could help you with this information.
Example
Suppose that you have:
- a Mt Isa commercial property that generates $50,000 income per year via your tenant lease agreement, and that your annual property expenses as the landlord total $5,000.
- calculated the ROI of comparable Mount Isa commercial properties as being 8%.
Your property’s net annual income = $45,000 (i.e., $50,000 less $5,000.)
Your property’s potential value would be $45,000 divided by 8% (i.e., 0.08) = $562,500.
Land development potential
This method is usually used for valuing vacant commercially zoned land. It’s calculated by estimating the total cost of developing the land for an intended commercial use, and then looking at the current value of comparable commercial properties that are already in existence.
The difference between these two figures gives an indication of the value of the undeveloped commercially zoned land.
Example
Suppose that you have:
- undeveloped commercially zoned land that could be developed into suitable retail or office premises for a cost of $200,000.
- researched the current value of similar retail or office premises as being $500,000.
The potential value of your undeveloped commercially zoned land would be $300,000 (i.e., $500,000 less $200,000).
The bottom line
Valuing commercial property is a specialist skill set. Our commercial property team at Jays Real Estate can help you to value your Mount Isa commercial property for potential sale or lease.
About us
Jays Real Estate has been Mount Isa’s premier commercial and residential real estate agency since 1981.
If you’re thinking about selling, leasing, buying or renting any Mt Isa property, or you need your property professionally managed, then contact our team today for an obligation-free chat!
We’d be happy to provide you with advice and to answer any property questions you have.