Truck parking appraisal

[LCazacu]

How to evaluate a truck/boat/RV parking lot business in Florida - fenced, gated piece of land, no structures, 4 acres, industrial. Occupied 75%, Income per month $9,500, profit per month $6,000? No long term contructs. In buisness 3 yrs. Any thoughts?

 

[Terrel L. Shields]

Develop a cap rate for it use income approach because a buyer wants the income most likely. Vacant land value is the base bottom value. If you can find a similar lot then extract your cap rate as a direct cap rate otherwise build an indirect rate.

 

[LCazacu]

Thank you for your valuable recommendation.

 

[Zephyr999]

What is the HBU? Could it's current outdoor storage use be an interim use? Maybe look at mini storage units with outside parking for rents and that prop type expenses, cap rate, etal.

 

[Terrel L. Shields]

What is the HBU? Could it's current outdoor storage use be an interim use? Maybe look at mini storage units with outside parking for rents and that prop type expenses, cap rate, etal.

As is some future use is not important. The "as if vacant" value is one value. The "as is" value clearly is its current HBU. Everything else requires some hypothetical "ideal" improvement. The fact it COULD BE a future site for something else is not the HBU "as is" nor will that future possible use change the value.

 

[George Hatch]

The business element isn't part of the realty interests and a lender isn't getting that if they take the property back.

If you're going to do an income approach it would make more sense to do a rent survey for single tenant yard rentals, 'ya? Those at least demonstrate what an outside buyer could expect from a passive income rental.

If the property is 4ac and graded industrial land is selling at $5/sf then that's already $870k just in land value, which at a 5% cap rate would justify $3650/mo in NOI. Whatever the property tax assessment is that goes on top of that. Whatever utilities or whatnot gets added, too.

 

[Zephyr999]

As is some future use is not important. The "as if vacant" value is one value. The "as is" value clearly is its current HBU. Everything else requires some hypothetical "ideal" improvement. The fact it COULD BE a future site for something else is not the HBU "as is" nor will that future possible use change the value.

No after analysis of market it would point to most likely buyer...investor vs a mom and pop owner.

 

[Terrel L. Shields]

No after analysis of market it would point to most likely buyer...investor vs a mom and pop owner.

The site has one value. And a mom & pop operation is just as likely as an investor to own or buy an on going parking business. There are are lot of syndicated parking lots in towns across America and sprinkled among them similar one owner parking lots. Often they are developed later after the site has ripened to a higher and better use. Say a parking lot may be bought to build a downtown convention center and hotel with parking. They may build a level or two below ground as parking and the first floor is the lobby. Perhaps some shops with all the rooms above. But that is a future unknowable event.

Don't let HBU get off into the weeds speculating upon some future use. HBU is here, now, today. And it is either "as if vacant" or "as (is) improved". Every house or improvement has an ideal improvement, but every ideal improvement is almost certainly a brand new building - which renders HBU rather meaningless if trying to extrapolate to today. HBU is simply asking "Are the property improvements contributing value to the land as if vacant." No matter how much functional or external obsolescence exists so long as it contributes value to the land, it is the HBU today.

 

[Zephyr999]

The site has one value. And a mom & pop operation is just as likely as an investor to own or buy an on going parking business. There are are lot of syndicated parking lots in towns across America and sprinkled among them similar one owner parking lots. Often they are developed later after the site has ripened to a higher and better use. Say a parking lot may be bought to build a downtown convention center and hotel with parking. They may build a level or two below ground as parking and the first floor is the lobby. Perhaps some shops with all the rooms above. But that is a future unknowable event.

Don't let HBU get off into the weeds speculating upon some future use. HBU is here, now, today. And it is either "as if vacant" or "as (is) improved". Every house or improvement has an ideal improvement, but every ideal improvement is almost certainly a brand new building - which renders HBU rather meaningless if trying to extrapolate to today. HBU is simply asking "Are the property improvements contributing value to the land as if vacant." No matter how much functional or external obsolescence exists so long as it contributes value to the land, it is the HBU today.

There's a divergence in the data profile of each buyer type. There's a reason Natl investors are grabbing up mom and pop storage facilities. Developing a proper cap rate isn't done without understanding the market dynamics stemming from HBU analysis.

Using a KISS approach as suggested is not ideal...parking lots are known as an interim use all day...evidenced by the increase in ground leases.

And doing a proper HBU analysis does not mean an as-is value cannot be developed.

 

[LCazacu]

Develop a cap rate for it use income approach because a buyer wants the income most likely. Vacant land value is the base bottom value. If you can find a similar lot then extract your cap rate as a direct cap rate otherwise build an indirect rate.

What would be a caprate for such a business?