Commrcl Bldg FMV
I live in an area where the old folks are leaving behind these vacant warehouses / shops close to the downtown district , good location and zoned appropriately. Much opportunity as I see it to give these places a facelift (replace aluminum siding with some commercial windows, add nice awnings and relandscape) and lease out to hair salons, retailers, light suppliers, etc. My question is- How much appraised value will a facelift like this ad to buildings like this in order to refi at 70 LTV to pay off private money used for facelift. (Owner is willing to carry for 5 years) Or does the value only come from the new leases of the new tenants occupying units?
In my opinion a facelift by itself won't add any value to a commercial building. A paying tenant would add value assuming that the resulting capitalized value of the income is more than you paid for the building and the improvements.
However a facelift may make the building much more attractive to a prospective tenant and that gets you to where you want to go more quickly.
Brainstorm,
Commercialking is right. Commercial real estate is not valued on the improvement. It is valued on the income. This is completely different from single family residential. Improving the look may encourage higher paying tenants, but it is the tenant that adds value to commercial real estate.