Nailing the Best Deal for Your Facility

The sale is not a wish list based on some magical number. It has to make sense for a buyer to purchase your property. He needs to cover his debt service and have the ability to increase cash flow through expansion, increased occupancy or rents. One or all of these will increase his net operating income and the overall value of the property. The buyer is generally reasonably informed and needs to find a value that works.

An appraiser would use comparative sales value, cost-recovery value including ground and depreciation, and the income value and capitalization rate to arrive at a value summary, heavily weighing the income value. A broker will primarily determine the income value of the property by finding the net operating income and the resultant cap rate price the market will bear.

The successful broker will share with the buyer the profit-and-loss statements for several years, a report indicating economic occupancy for the total property and each unit size, as well as demographics of the trade area and a summary of the competition in your market. He will need to show a buyer a five-year projected return on investment.

Your broker of choice will provide you with comparable sales in the region to determine earnings, real estate value, marketability factor and future growth in the area. Keep in mind you are trying to get the highest price for the property or the lowest cap rate, and the buyer is trying to purchase the property at the lowest price or the highest cap rate. A professional with integrity, confidentiality and experience will assist in finding a compromise price between the buyer and seller to put the deal together.