Deep Water and Horses

Does it get any better?  Just listed a lovely horse farm on deep water in the historic waterfront town of Smithfield, Virginia.  The property features eight (8) acres, two pastures (one is fenced), two dwellings (3 bedroom, all brick ranch with deck and hottub overlooking the water and a 2 story apartment located near the HUGE barn).  In addition to the dwellings, the property features stalls, feeding areas, storage sheds and a huge barn.  All for under $550,000.  Visit my website at www.tchurchwell.com for more information or call (757) 251-6082 voicemail or Shearl Adkins at (757) 696-3207.

Capitalization Rates, or Cap Rates, in Commercial Property Analysis

I deliberately didn’t talk about “cap rates” in the prior commercial article as I wanted the blog to be a very general introduction. I didn’t want to scare away people by using terminology, math, or accounting formulas. However, when considering investment property, whether from a seller viewpoint or a purchaser, one must examine capitalization rates, commonly referred to as “cap rate”.

Essentially, cap rate refers to the expected net return on a specific property. It is calculated by taking the gross rents (all rents, fully occupied) subtracting vacancies and credit loss (people not paying) to derive effective rents. Then all expenses, specific to the property, are subtracted from total effective rents. Note that income taxes and debt service are not included. The number derived will produce the net operating income for the property. The net operating income is then divided by the required return (for the buyer) to derive a purchase price.

GI-Vacancies/Loss=Effective Rents

Effective Rents — Operating expenses = NOI

NOI divided by expected return = Purchase Price

This is important to the seller, as well. Investment properties are priced based on cap rates (and a few other considerations). If a property is producing a NOI of $100,000 and the market expects a 10% return for that type of property, the expected sells price is $1,000,000. Thus, the seller should not expect a price of $2,000,000.

While cap rate is a very important component of commercial investment analysis, there are other considerations utilized in making these decisions. Internal Rate of Return, Gross Rents Multiplier, Cost per square foot, etc. are all analysis tools used in the decision making process. A professional who understands these calculations should be consulted when listing or purchasing investment property.

For more information, please visit my website at www.tchurchwell.com or email me at tchurchwell@gsh.com or call Tim Churchwell at (757) 251-6082.

Purchasing or Leasing Commercial Investment Property in Hampton Roads

Thinking of purchasing or leasing a commercial property? Whether you are thinking about office property, warehouse, retail, or multiuse, there are some factors that should be considered.

First consideration is intended use. Do you intend to use this property yourself? Lease it to others? Perhaps lease part of the property to others? How long do you intend to occupy the property yourself?

Second consideration is zoning. Especially if purchasing, confirm that the proper zoning is place. This should be a contingency in the contract prior to closing.

Third is the “price”. If leasing, what is your square foot price? Be sure to inquire about additional fees and requirements. CAM’s (Common Area Maintainence) usually amount to another $1.50 to $3.00 per sq. ft. Also, you need to find out if the lease is a “net lease” and what type. This means who pays for taxes? Grounds? etc.

Fourth, build out costs. At least in this area, the square footage rate is merely for the “shell”. Often, there is additional build out costs associated with getting the office, retail, etc. space to your perferences. If properly negotiated, then some of this costs can be offset, usually in the form of a “free rent” period if leasing. If purchasing, should be considered in the overall costs of your purchase.

Parking is the fifth concern and is often overlooked. You might have the perfect location and the perfect price but if you require 50 parking spots and zoning only permits 25, then you will find yourself in a bind later.

Pricing, of course, is a major consideration. Keep in mind that pricing of commercial real estate is done differently. Income analysis for existing property that will be leased out is going to be very important to any lender. Consideration for occupancy, lease rates (the subject property as well surrounding properties), are carefully examined and should be a major consideration in your offer. However, sometimes the value is in the location and the land. A class C retail space sitting on a waterfront parcel and getting high traffic might be considered for redevelopment.

These are just a few, very brief considerations when making decisions on commercial property in Smithfield, Isle of Wight, or in Hampton Roads. Let us know if we can help. Or visit our website at www.tchurchwell.com for more information.

Riverwalk in Chesapeake, Virginia for under $200k!

Just listed an immaculate home in Riverwalk in Chesapeake, Virginia for under $200,000. This very well maintained home features two master suites, recently replaced windows, new light fixtures, fireplace. Find serenity in the private back yard with the perfect entertaining deck. Just a short walk to the clubhouse, pool, and tennis courts. For more information, check out http://gshre.com/0831755.ad or visit www.tchurchwell.com. To arrange your personal tour, call Tim Churchwell at               (757) 456-1986        or Shearl Adkins at               (757) 696-3207       .

Waterfront Home in Gatling Pointe Price Reduction

20142 Magnolia Court W is a custom home, over 3400 sq. ft. that sits on 1.6 acres on the water. The sellers have just reduced the asking price to only $524,900. This custom waterfront home features such upgrades as an in ground sprinkler system, central vac, natural gas grill, granite countertops, custom cabinets, an office, and wired inside and out for music. Relax on the back deck overlooking the water, never having to worry about the tank running out while grilling. Gatling Pointe is a waterfront community of custom homes located in the waterfront historical town of Smithfield, Virginia. It features large lots, sidewalks, playgrounds, a private restaraunt, boat slips, pier, pool, tennis courts, and many more amenities. Call Tim Churchwell at               (757) 456-1986        or Shearl Adkins at               (757) 696-3207        to arrange a private tour or http://gshre.com/0823206.ad for more information on this wonderful home. For other properties, be sure to visit www.tchurchwell.com.

Waterfront Community of Gatling Pointe Home Price Reduction

100 Clipper Creek, a 3,200 sq. ft. low country style home located in the waterfront community of Gatling Pointe in Smithfield, Virginia has just slashed the price to $424,900! This home features a first floor master suite, a wrap around front porch, a first floor office/library, a screen back porch, 3.5 baths, and is only a couple of blocks from the waterfront, the yacht club, the marina, the pool, the playgrounds.

To arrange a private showing or for more information on this lovely home, call Tim Churchwell at               (757) 456-1986    or visit http://gshre.com/0815452.ad.  For other properties, check out our complimentary real estate resource center at www.tchurchwell.com today. Other homes available.

Gatling Pointe is a waterfront community in Smithfield, Virginia and centrally located to Hampton Roads. Featuring deep water, deep water access, a private restaraunt, a marina, sidewalks, mature landscaping, playgrounds, and wonderful residents. Located only minutes from Langley, Newport News, Portsmouth, and Norfolk, come take a look at this secret of living in Hampton Roads.