Analyze Value for Commercial Real Estate – Website Traffic

Dear M & M:

I am looking to start a business and am looking into purchasing some commercial real estate.  What are some approaches or appraisal methods to analyze or compute a value for the commercial real estate I need to enable me to see how much I should spend?

–Alice

Dear Alice:

Warren Buffet once said, “Price is what you pay, value is what you get.”Three common methods to analyze the value of commercial real estate are the capitalization/cap rate, comparison and replacement. The capitalization/Cap Rate method arrives at a value based on what the real estate generates in lease and total revenue, minus expenses multiplied by a cap rate. Appraisers base the analysis on what an investor would pay for a similar investment. Capitalization rates, or cap rates, provide a tool for investors to use for roughly valuing a property based on its Net Operating Income. The comparison method to evaluate commercial real estate is exactly what you think it is. The value of the property is based on a comparison of similar properties that are the same size, condition, in the same or similar vicinity or similar. Sometime this comparison is very difficult as there are so many type of commercial real estate available. Very rarely do you run across two properties that are exactly the same. Many times land and building can be valued separately and the building is sometimes valued using square footage rates.  A final method is called replacement. Once again replacement is exactly what it means. What would it cost to replace or reproduce? Age, amenities and condition of the building must be considered. Do not forget to factor land preparation, building permits, architectural fees, utility installations, parking lots, signs and many of the things already in place need to be considered thoroughly. Gather your team. Get a good real estate broker, get some legal advice, and seek out a good certified public accountant. Insurance agents, property managers, other business owners and business advisors are a few other people recommended to seek advice from before you buy.

-M&M

Dear M & M:

My web site is built now how do I get traffic to it?

–Dennis

Dear Dennis:

Considering your web site is built besides maximizing all online search engine optimization (SEO) techniques like using keyword titles to generate more traffic from search engines, developing unique content that is easy to navigate, using reciprocal linking (mutual links between two web sites to ensure mutual traffic) and that you are connecting social media networking sites to yours to increase traffic there are other on line activities that can help to increase traffic.  Yelp, trip advisor and other online rating platforms if used correctly can draw traffic. In addition, including links to your web site with a tag line below your signature on all your emails is another way to increase traffic online. With all that said, do not forget the power of off line advertising to turn consumers to customers. Business cards, magazines, billboards, newsprint, radio, TV and company brochures are some traditional ways advertisers communicate or deliver messages to an audiences to get potential buyers to buy, recognize or receive information about products and services.  Attracting consumers that are receiving messages from other sources like the newspaper, magazines, radio and TV cannot be ignored. They are a large and very important part of any marketing campaign. Do not forget to place your web address on every form of advertising you do. Post a link to your web site on your next coupon or print ad. It will draw traffic. Put a link to your web site on your business card. It will draw traffic to your web site. Remember, have a call to action. Go to this web site to register for something, go to this web site to order something or go to this web site to find out something informative. Do not forget the incentive it’s called, “What’s in it for me”.  Make it worthwhile, a 5% discount will not get me out of my chair.

-M&M

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org .

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