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Author Topic: Rental Rate?  (Read 560 times)

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HawgWild

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Rental Rate?
« on: June 24, 2018, 11:09:47 am »

Could any of you ball park an annual rental rate range for an 11,000 square foot metal building on 1.1 acres. It was formerly used as a workforce training center. It's located in  the city limits of Conway and recently appraised for $700,000. I realize that's not a lot to go on.

Here's a pic of the building: https://goo.gl/maps/adkMPvE5FLq

TIA
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ricepig

Re: Rental Rate?
« Reply #1 on: June 24, 2018, 11:57:12 am »

Of course, the obvious answer is what the market dictates. I'm guess $3500 minimum, at that's just using a 6% return on the $700k. I would think just looking at the building, I would definitely want more.
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HawgWild

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Re: Rental Rate?
« Reply #2 on: June 24, 2018, 01:07:11 pm »

So, if someone is renting it for $20,000 per year that's a pretty good deal, for them?
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ricepig

Re: Rental Rate?
« Reply #3 on: June 24, 2018, 01:16:33 pm »

So, if someone is renting it for $20,000 per year that's a pretty good deal, for them?

Lots of variables there. I have no idea of the condition based on that picture, and if it's an empty shell or what. I was just going off your $700k price and knowing that I would want 6% return on my investment if I owned it. It may appraise for $700k, but only bring 1/2 of that. I would guess it's a good deal if it  is what they are looking for and fits their budget.
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HawgWild

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Re: Rental Rate?
« Reply #4 on: June 24, 2018, 01:23:31 pm »

TY
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je100

Re: Rental Rate?
« Reply #5 on: June 24, 2018, 01:26:07 pm »

So, if someone is renting it for $20,000 per year that's a pretty good deal, for them?

One could sell the property, put the cash in a 5-year CD earning 2.9%, or $20,300 annually - with no property tax, insurance, risk of vacancy, etc.

https://www.bankrate.com/cd.aspx

It's possible that the property is worth that much for reasons that aren't fully valued by rentors, however (e.g. highly appreciated lot that doesn't really mean anything to the rentor).  But if that's the case, I'd still consider selling to someone that does value the structure or the lot that it sits on.

But as Rice said, it may not really be worth that kind of money to an actual buyer.  Which makes the annual 20k more in line.
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