Many real estate investors in Texas are interested in getting into the commercial market. Commercial real estate across the country is estimated to be worth $10 trillion, and the value of these properties has continued to increase on a regular basis. There are several ways that people can get involved in the market, from purchasing property for their own businesses, becoming landlords or buying into a trust or other investment vehicle. For any project, however, one of the most important steps is establishing a correct valuation for a property.
This information can be critical in determining whether a particular piece of commercial real estate is a good investment as well as setting the purchase or sale price. There are several different approaches that people can take to establish value. Under a cost approach, investors can estimate the amount of money it would cost to build the property today, including the cost of land, labor and materials. This is particularly relevant for unique or otherwise unusual property. Income capitalization is another approach that can be particularly important for investors because it is based on determining how much money an investor could reap from a specific property. This is generally based on similar properties nearby as well as overhead costs.
The market approach looks at the sale prices of nearby or similar properties, including their ages, amenities and other factors. Others can examine the value of the rental contracts in a property in comparison to its sale price to determine its ongoing value.
While there are a number of ways to assess the value of a particular commercial property, people can opt for a method that prioritizes their particular goals. When considering entering the market, a real estate attorney might help people negotiate an advantageous contract and protect themselves from misrepresentation.
