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Lynn Thirion, Other/Just Looking in Watkins Glen, NY

We own a historic Flatiron building in upstate NY and we are trying to find comparable pricing on similar

Asked by Lynn Thirion, Watkins Glen, NY Tue Jun 3, 2008

buildings and are having a difficult time. The building was built in 1840, is 3 stories, has 6 apartments on the upper two floors for income and an Art/Glass gallery on the first floor. Any ideas for starting price?

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Joanne Lane gave you the best answer....and I would add the following; as your building sounds like a mix of residential and commercial it will be your cash flow from the building that will help to determine your highest and best price. I would recommend you find a good commercial appraiser in your area and pay to have an appraisal done before placing your property on the market. If there is not a building in the area that compares to yours an appraiser will have access to solds of similar buildings in upstate NY, and will advise you on how to price the property for your location. Also, LoopNet is a good commercial site, however you would need to be a Realtor to place your listing for sale on that site. If you decide to list your property with an agent you might want to ask if they have a LoopNet account. Good Luck!
0 votes Thank Flag Link Thu Jun 5, 2008
Good question. I just sold an 1830s mixed use building that sounds very similar to this. It attracted interest from a variety of folks from many walks of life, with wildly differing opinions as to value. This can be disconcerting unless you have confidence in your pricing. Here's a couple of ways to look at it that might help you, none of which is intended to substitute for proper professional advice from a qualified commercial appraiser, which would be money well spent.

First, ask a Commercial Broker for a price opinion using sales data. Since there aren't any recent comps in the immediate vicinity, you cast the net wider, then make adjustments for the variables. The key factors you would be looking to match are historic/landmark status, building/lot size, zoning, and foot traffic, then make adjustments for location.

Second, interested investors may evaluate the property based purely on how much income it makes, without even walking through the door. These folks are using the income approach to value and want to know what size of bank loan they can secure using the current income derived from rents, as well how much profit the building makes per year after paying all the expenses. Spreadsheets should include a comp for market rent on the art/glass gallery, as I imagine you haven't actually been paying any, but the buyer will want to know how much rent it could achieve in today's market.

In addition to the broker's expertise, someone else who could be very helpful is the commercial lending officer in your local bank. You could complete a commercial loan application as if you were buying the building from yourself, then ask the loan officer how much the bank might be willing to lend a buyer assuming the applicant is qualified in all other respects.

As a rough rule of thumb, you could treat the $ value of the potential loan as 70%-75% of the price someone might be willing to pay for the property, given the 30%-25% balance of cash banks like to see from a buyer for this type of project, at least the ones around here.

You could also run a second set of numbers using projected B&B income rather than current income to see how much difference it could make to the Profit & Loss. This will also need to factor in the cost of servicing an additional loan to make any structural changes necessary for the conversion to B&B. .

However, bear in mind that if you ask someone to pay more because of potential gains, rather than realized gains, they have no leverage with the bank for that part of it. Hence you can only expect to achieve ambitious pricing if a highly qualified buyer with deep pockets can be convinced to buy into a dream, either the one that you are walking away from, or their own version. That's a tough sell, but it does happen and the great thing about a building like this, is that it's uniqueness will attract a lot of interest.

Good Luck!
0 votes Thank Flag Link Thu Jun 5, 2008
Yes we are going to list the property and the condition is very good. My husband and I did all of the lower level renovations to the gallery and are the owner/operators of the glass gallery/studio. All 6 of the apartments are fully occupied or could be converted to lodging as we live in a lake community where B & B's do extremely well. The building has enormous potential!!
We purchased it for investment 7 years ago & my husband is now looking for less overhead.
0 votes Thank Flag Link Wed Jun 4, 2008

Where are you going to advertise it? Why are you selling it? Was it family-owned? What is the overall condition? Check out http://www.loopnet.com see if that turns up anything.
Web Reference: http://www.tommcgiveron.com
0 votes Thank Flag Link Wed Jun 4, 2008
Contact a commercial broker in your area for assistance or hire a commercial appraiser.
Web Reference: http://GailGladstone.com
0 votes Thank Flag Link Tue Jun 3, 2008
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