The local banks in Jackson Hole, Wyoming usually require that a certified commercial appraiser do an income approach on a property. This appraisal approach helps the investor to understand if the property has any potential for positive cash flow after debt. This cash flow pro-forma is often called an Estimated debt Coverage ratio. The capitalization rate is typically lower than normal comparative commercial properties in Jackson Hole because of high land prices in Teton County and the Town of Jackson Hole. This appraisal approach can be good because most investors stay out of the commercial real estate markets in Jackson Hole if there is not a high cap rate. The problem however is that the margins for positive cash flow is narrow and the investor may experience negative cash flow until the property can perform better. This may require a larger down payment by a commercial buyer.
The commercial appraisals that is done on a cost approach usually is more favorable as a result of the high land values for commercial land in Jackson. This type of appraisal may be performed on a comparative land and actual (cost to build) which is how most all of the residential and condominium appraisals are done. Most of the commercial property purchases can experience faster appreciation than residential property purchases in Teton County.
Commercial appraisals are often ordered for purposes of re-financing and or a build-out of the existing property. Many lodges in Jackson Hole are in excellent locations and owners are moving to convert their hotel or Resort property in to luxury accommodations. Another trend is to borrow equity from a bank to turn single room hotels into larger suites or condominiums. Recently the Miller Park Lodge went through this transformation.
Another obstacle for commercial appraisals in the area is the lack of comparable properties to provide accurate information. Every property is usually drastically different from any comparable property due to size, location and proximity to a particular real estate region. The Teton Village real estate market is also experiencing a sudden rise in property values due to the advent of several luxury hotels and condominium projects in slopeside locations. The market literally changes daily as much higher prices are being paid for the same unit in a one-year span. This is due to a decrease in available inventory and a high demand. These sales are usually driven in a market where buyers pay cash or large down payments to purchase luxury rental lodging properties.
It is sometimes necessary to challenge an appraisal that is too low on a commercial investment property . The real estate broker may sometimes be aware of a recent sale that has not been closed or disclosed to the MLS statistics if it was closed in escrow. Sales are so powerful and brisk that it is difficult for the appraiser to have all the necessary information needed to do a proper evaluation. An additional fee may be required for the appraisal but is well worth it if the borrowing power is diminished for any reason.
For more information on Hotel, Lodge or other commercial real estate properties for sale call our Broker for a full package.
Jackson Hole Appraisers for Local Appraisal Information
Appraisal Service of Jackson Inc.
Granite Creek Valuation
Hoffman & Associates
Hoffman & Associates is a full service real estate company offering appraisals, buyer or seller representation in real estate transactions and property management. We have been serving Jackson Hole for 31 years and are considered the local experts. 307-739-1104
Rocky Mountain Appraisals
Teton Appraisals and Consulting
Call our local field office at 800-687-1154 if you have any questions.
You can also email email@example.com directly for any questions or concerns you have.