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If some one was to trying to figure out how much my motel is worth would they go by the real-estate property notice of evalation

by angela Petrovic from , Colorado. Jan 11th 2012 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,360 contributions

If you're talking about a tax bill or tax assessment, then more likely than not.. No.. When determining the value of commercial real estate, many, many things are considered... its income, it's location, it's access to major roads/ freeways, it's zoning, etc... In some states, the tax bill is close to what your home would be worth, but for other states, the tax assessment is much lower or higher than the actual value of the property. When it comes to commercial real estate, the tax assessment valuation is there only to establish a base for tax purposes, not to show true valuation... nothing takes the place of an actual appraisal. WilliamAcres.com

Jan 12th 2012
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James Barath (JamesBarath)
#9 ranked lender in Indiana - 351 contributions

Not exactly. Reach out to an appraiser who is a qualified to evaluate commercial properties in your local market. Be advised that the cost of a commercial appraisal will be 5 - 10 times more expensive than a residential appraisal.

Jan 12th 2012
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Rudi Hofmann (CaPortfolioLoans)
#270 ranked lender in California - 380 contributions

Angela- The following comes from a page in my "Little-Book-site. Entitled "Getting A Commercial Loan: What you will find is Commercial property is based on the final Debt-service-income....Be PreparedHave your business plan, financial forecasts, financial records, financial statements and the history of the property's income or owner-user's business prepared in advance. These documents must be accurate and current. Debt ServiceEven if you have substantial equity and excellent credit, it will be difficult to get a loan if the property is not generating enough income to at least cover the mortgage payment. Debt Coverage Ratio (DCR)DCR is the monthly debt compared to the net monthly income. DCR limits are determined by property type and the lender's perceived risk which may vary. Debt Service Coverage Ratio (DSCR)DSCR equals Net Operating Income (NOI) divided by Total Debt Service. NOI is the income after operating expenses. Total Debt Service includes the principal and interest payments of all loans on the property. To determine DSCR divide the NOI by the mortgage payment. Investment PropertyLenders want to know how well the property has performed financially for the past three years, and how it is expected to perform in the future. Depending on the property's performance, lenders may want an explanation on how you plan to get the property to perform better. Owner-User PropertyLenders want to know the net income of the business. They want to know that you are capable of running that type of business. They want to know there is a history of generating the type of revenue and profit that will enable you to make your mortgage payments. AppraisalComparable sales, comparable rents, debt service, age of property, improvements, condition, location, appearance, local market conditions, proximity to environment hazards and zoning are important factors in determining a property's fair market value. Time-FrameExpect it to take from 60 days to 90 days, depending on the complexity of the transaction.

Jan 19th 2012
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