How To Value Income Property

We have cash buyers for apartment complexes, retail buildings, office buildings, industrial buildings, medical buildings, special use buildings such as bowling alleys, daycare centers etc, and leased land. The criteria is: (a) rent income should be $10,000 or more monthly, and (b) the lease should have a minimum of five years remaining or a tenant willing to sign a new lease at closing. If you have any questions contact me.

Income Property Valuation Worksheet

(Click here for a .PDF Version)

A. Operating Income:

Annual Rental Income: $ ________________

Other Annual Income: $ _________________

Total Annual Income: $ __________________

B. Operating Expenses:

Annual Property Taxes: $________________

Annual Insurance Premiums: $ __________________

4% of gross annual income for management: $ ________________

3% of gross annual income for maintenance: $ ______________

3% of gross annual income for Vacancy/Collections: $ _______________

All other annual operating expenses: $ _______________

Total Annual Operating Expenses: $ ____________________

C. Net Annual Operating Income: $ _______________

Subtract B from A to get NOI

D. Capitalization Rate: _______________ %
Capitalization Rate is the number of years it takes for the cash flow from the property to pay for itself if no capital improvements are needed. Investors frequently us Capitalization Rate as a measure of the return they require to purchase. The higher the Capitalization Rate, the better.

E. Value: $_______________
Value is determined by dividing the NOI by the Capitalization Rate. For example, an NOI of $100,000 divided by a 10% return equals a property value of $1,000,000. Please contact us for information on this technique or to determine the return required by investors for different property types.