Valuation

The property is a small strip mall consisting of a large retail space on each end with smaller spaces in between. Currently, one end of the property is occupied by a local grocery store and the other large space is leased to a store which sells craft supplies at discount prices. In between are several small retailers and one hairstyling salon. There is a large parking area in front of the buildings and a circular fountain in a common plaza area about midway between the two large retail spaces.

Use the approaches we learned about (Sales Comparison, GIM and Direct Capitalization) to determine a reasonable purchase price for the property.

Target
Target asking price:		$2.1 mm
Leasable square feet:		80,000
Construction:		brick
Parking:		Just meets code
Gross monthly rents:		$28,125.00
Net annual income:		$220,000.00
Fully leased
Comparables
Property 1
Sale date:		January 15, 2004
Age:		Built in 1995
Exterior:		Cinder block
Parking:		Extensive for customers and vendors
Size:		65,000 sq. ft.
Location:		1/2 mile from target, near industrial park
Gross Annual Income:		$290,000.00
Net Annual Income:		$101,500.00
Property 2
Sale date:		April 11, 2011
Age:		Built in 2000
Exterior:		Vinyl siding
Parking:		Pre-code, limited
Size:		75,000 sq. ft.
Price:		$1.8 mm
Location:		2 miles toward city from target
Leases:		98% leased
Gross Annual Income:		$297,000.00
Net Annual Income:		$148,500.00
Property 3
Sale date:		December 23, 2001
Age:		Built in 1975
Exterior:		Stucco covering cinder block
Parking:		Barely complies with code
Size:		95,000 sq. ft.
Price:		$1.4 mm
Location:		5 miles farther away from city than target
Leases		Fully leased
Gross Annual Income:		$225,000
Net Annual Income:		$175,000