Figure Out the Potential Rental Income of a Commercial Property

As a commercial mortgage broker, one of the aspects of my job is to establish the value of a property. One of the most viable ways to do this is to figure out if the rental income is in line with the surrounding market rents. The rents will make an important impact on value whether the borrower is refinancing or purchasing. The following are facets that I analyze in order to help me establish potential rental income for multi-unit and commercial real estate.

I first look at the condition of the property and the quality of the maintenance. How do these characteristics compare to surrounding comparable properties?

I look at the character and style of the building. Does it compare favorably with other buildings in the surrounding area?

What is the availability of transportation, shopping, parks, and places of worship?

What is the personal income range, financial capacity, and stability of income for existing tenants and neighbors?

What is the condition of the housing market in terms of inventory on the market, sales price range, and new construction?

Is there growth and expansion of the community?

What is the economic level of the community?

What kind of job of job opportunities are near the property?

What is the unit mix of the property?

Is there a high vacancy factor in the property or fully leased?

I review these questions. With this information I can make an educated guess about the future potential income. I can also identify steps that can be taken in order to improve potential income. This information allows me the confidence to submit a file to investors fully knowing that the borrower and property in question are a good investment risk.

www.pacificcapitalloans.com