Purchasing any property involves certain risks. Whether it’s overvaluation that will make you pay more or unexpected increases in interest rates, purchasing a property can become a touchy issue if not handled right. This is especially true for commercial properties. As such, you should always ensure that the valuation of your commercial property is handled by professionals with experience in this particular field. Such professionals will provide you with the necessary insight and data to make an informed decision. Whether they’re using the cost approach or the market approach, such an assessment helps you determine whether or not your financial decision makes sense.
Commercial property valuation provides the following benefits.
Helping to ascertain the best use for the property
If you’ve ever wondered whether you’re getting the best return on investment for your property, a commercial property valuation can help to put this question to rest. Maybe you’d like tenants that pay higher rates but don’t know how to justify a sudden hike in rent. A professional can help determine your property value, taking into consideration all the relevant factors. Such valuations also help you get the best property price in some situations. If, for example, the zoning regulations change and you find your property in an area designated for commercial properties instead of residential ones, you can command a much higher price for your property. A professional can also help you determine where your property falls in the real estate asset class. This can help unlock potential extra profits if your property falls in a more lucrative category.
Obtain financing
Sometimes you may need to acquire additional funding for a developmental project on your property. Maybe you’d like to build more office units, expand a large section of your commercial building, or carry out some significant renovations. Obtaining a loan from a bank or any type of financial institution will require an appraisal of your commercial property’s value. Such valuation helps the lenders determine your risk of default on your debt. A positive valuation of your commercial property means you’re considered less of a financial risk, making it easier to borrow money against your property valuation. This process, however, usually requires an independent valuation by a professional appointed by the bank. If your application is successful and the loan is granted, you’ll bear the cost of your property valuation.
End-of-lease repairs
Disagreements can arise as to the extent of damage suffered by a building. This is especially true if the lease agreement does not include clear language outlining the state of your property before a tenant moves in. Usually, your tenant may claim that damages cost much less to repair if you just quoted an arbitrary sum. Getting a valuation for such a commercial property can help to settle such disputes. A professional evaluation will ensure that all repair costs are calculated based on the current market value of the commercial property. Of course, such an evaluation takes into account the age of the building, among other factors.
Market-related rent costs and expenses
There are several ways of increasing your commercial property’s value, with rent hikes being one of them. Evaluating your commercial property helps you know where you stand with regard to the general prices charged in your local area. Another reason for having your commercial building valued is that it helps you know the cost of maintenance, whether utilities or local taxes. Such a figure helps you understand where the bulk of your property expenses come from and whether you can do away with certain expenses to increase profits.
Deeper understanding of your commercial property
Gaining insight is very valuable for any property owner. An experienced commercial property valuer will give you an objective assessment of the monetary value of your property along with all the crucial details needed to make the right decisions. Location, for example, is crucial to determine not only your commercial property’s current valuation but also its likely future appreciation in value (or lack thereof). A place experiencing an economic boom, for instance, will likely attract a lot of investments. This has the effect of driving property values up. All such details will be made known to you after a property valuation.
It’s always better to be armed with such crucial information regarding your commercial property. This makes it easier to proceed with transactions without delays.
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