bowling

[MNRural]

Lender needs RE value on a small town bowling center. I'm assuming that a business and equipment appraiser would be required to extract out the BEV and FF&E.

I would think a potential buyer's first step would be to look at the books....to me, that means they are buying a business that also has real estate and equipment.

What is the methodology?

 

[ETex2]

I'll take a stab at this one, since I recently appraised one in a fairly small town.

In three years, I found about 3 sales of bowling alleys in all of the Dallas area that would be even remotely comparable to the one I was looking at. None were in a similar location and none of the buyers or sellers would disclose sales price information. Forget trying to separate the business value from the real estate. Most buyers and sellers of special use properties such as this don't go to the trouble or most have no idea how to even attempt it. Which leaves appraising it is a commercial building and not a bowling alley, which is difficult and weak at best, or the Cost Approach. Bowling alleys are typically operated by the owner and not leased, so the Income Approach is tough, unless you can find a magic formula to separate the income to the real estate from the business. Then a few years of operating statements might be helpful in this approach.

The result is a fairly weak appraisal that could be considered as a use value or value to a specific user. Take out the equipment, which is sometimes covered under a separate loan, and you have a basic commercial building but the cost of conversion for alternative uses can be extremely expensive. But in the end, the Cost Approach if properly done should give a reasonable indication of the contributory value of the real estate.