Broker Comments on his own Investment Properties: By Ron Miller
For the serious commercial buyer in Jackson Hole I would like to share some appraisal information on 2 specific Jackson Hole Investment Properties purchased by holding companies I have owned since 2001. The appraisals were ordered for purposes of sales and re-financing of the respective properties. These appraisal reports are most interesting if studied carefully, and I will be more than happy to send potential investors the appraisal reports. The most interesting part of both appraisals is the sheer lack of comparable marketing statistics for the appraiser to work with. The banks usually require that the appraiser do an income approach on the property. This appraisal approach truly helps the investor to understand if the property has any potential for positive cash flow. The capitalization rate is usually lower than normal comparative properties in Jackson Hole because of high land prices in Teton County. This factor is both good and bad for investors. It is good because most investors stay out of the Jackson Hole Commercial Real Estate marketsin Jackson Hole if there is not a high cap rate. It is bad because the margins for positive cash flow is narrow and the investor may experience negative cash flow until the property can perform better.
Read: Jackson Hole Commercial Investments
The appraisal that is done on a cost approach usually is higher as a result of the high land values for commercial land in Jackson Hole. This type of appraisal is done on a comparative land and building value (cost to build) which is how all of the residential and condominium appraisals are done. An interesting point to be noted by the buyer is that most of the commercial property purchases are much better than residential property purchases in Teton County. The first appraisal I can send is of the Grand Victorian Lodge, which I sold in 2004 for a $500,000 profit. We orginally paid 1.5 Million for the property in 2001, and sold it for $2,015,000. If you study the appraisal of the Grand Victorian Lodge you will note that the building is situated on 3 valuable lots in Downtown Jackson.
The appraisal jumped significantly in a short time for 2 reasons: 3 other comparable lots were purchased as vacant land near this building for $1,200,000. Whether one likes the building, (which I did) in reality the building consisting of 7000 sq ft above grade living space was now originally purchased for $300,000. This is why the property easily sold for $500,000 more than we paid for it. We did some up-grades as the property produced cash flow over and above expenses. We also depreciated the building and fine furnishings to recapture nearly 400,000 in accumulated depreciation.
We will soon be putting much more appraisal information online for the investor, but please feel free to call our Real Estate Broker, Ron Miller directly on his cell phone at 307-690-6331. We may need to enter into a confidentiality agreement depending on the appraisal information you are recieving.
