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Property evaluation is critical in the commercial real-estate industry, as it allows lenders to assess and manage risk when considering whether to lend money for the purchase or renovation of a property. Valuation also becomes important to investors in income-producing properties when a county auditor proposes raising the value, potentially increasing the tax bill of a property.

Specialty Valuation Group owner Aaron Wright has analyzed commercial properties for 18 years, with an emphasis on placing values on so-called special-use properties.

Q: What attracted you to valuation of specialty properties?

A: We appraise all commercial real-estate types: offices; retail; apartments; and industrial. But 65 percent of what we do is “other,” the ones that don’t fit into any of those groups, like mixed-use properties, bowling alleys, marinas, hotels, landfills. We did 40 appraisals (in 2017) for auto dealerships for lenders. …

I’ve always been a car guy, so that was fun way for me to get into putting a value on dealerships. It’s interesting to see what makes these properties tick, what drives the value. Determining what makes a dealership — or a funeral-home property — valuable, what drives the demand, has always been fun to figure out. I’d get the oddball assignments…

Q: Death drives funeral homes.

A: (Funeral homes) are where I cut my teeth (as an appraiser). It all started with one report. We looked at death rates in the county and applied it to the subject property’s trade area. We projected future demand based on the demographics.

Q: A lot of changes in that businesses, with even well-established funeral homes going out of business.

A: Yes. A lot of changes. About 27 percent of the funeral business was cremation 20 years ago. Now it’s 50 percent-plus. Cremations are lower cost, but the profit margins are higher. The whole industry is adjusting to the trends. Some are knocking it out of the park. … I don’t see that business going away. It’s recession-proof. People are going to die.

Q: So property values can change as quickly as the business or industry?

A: An appraisal reflects the market. And the (value) is good on the effective date. Our job is to appraise a property to what the market is doing then.

Q: How do you determine that value?

A: We’re looking at (comparable) sales, other real estate that’s similar. Owner-occupied properties — like gas stations, bowling alleys and body shops — are more of a tool for the business than income-producing. Often times there aren’t comps, or the property is tied to a sale of the business as well. It becomes, “What percentage (of the combined value) is the business? The real estate? The FFE (furniture, fixtures and equipment)?” We have to dig into it to see if the (appraised real-estate value) is reasonable.

Q: I understand you appraised a castle.

A: Yes, a banquet facility on 80 acres in southeast Ohio used for (medieval) re-enactments. It’s a new business in a 15,000-square-foot castle. Cost was the most applicable appraisal method because so much of the value is wrapped up in the land. It’s also new construction, so you don’t have the subjective estimates of depreciation.

Q: How do you value a landfill?

A: Cubic yards of trash capacity remaining.

Q: And a marina?

A: By the lineal feet of dockage and gross income, including any restaurant it may have.

Q: How do you generate business among lenders?

A: Business development is about relationships with the lenders, showing them our qualifications and sample reports and competitively bidding (anonymously) for specific appraisals they need done.

Q: What sort of growth plans does SVG have after 14, 15 months in business?

A: We want to open satellite offices in 2018. We’re looking for two or three, like Charlotte and Chicago, as key markets. In four years, we’d like to have 10 markets nationally. We’d hire local, licensed experts. Appraising for lenders is a local thing; they want someone in the local market.

Q: Are there any other opportunities for the firm?

A: We’ve been fully focused on our lender work since we started. But we’re looking into 2018 and would like to continue diversifying our client base, working more with property attorneys and accounting firms. We’re anticipating an uptick in (property) tax appeals (as expert witnesses) for court cases this coming year with the completion of county auditors’ reappraisals that occur every six years.


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