Investment property valuation

[CYNthesys]

Does anyone have any idea please as to what rental income multiplier lenders use when they calculate the open market market value of a commercial property?

I seem to think it is something like - annual rental income x 2 1/2 x 5 = property's open maket sale value

[SpringerSpaniel]

Re: Investment property valuation

For residential property, it is 10 x annual rental. I don't know re commercial property offhand. The formula you suggest is 12.5 x annual rental, which is in the same ball park.

[CYNthesys]

Re: Investment property valuation

Thanks,
I thought I was more or less on the right track, but I'm backtracking 15 years +, so think I will will work on the basis of annual rental income x 10

[labman]

Re: Investment property valuation

Is this any use?

How to Calculate and Use Gross Rent Multiplier GRM - Formula for Gross Rent Multiplier GRM

[CYNthesys]

Re: Investment property valuation

I'm having to work on rough figures, but am thinking that as the rateable value of a commercial property is assessed on the annual open market rent that the property is expected to generate, I think that rental or rateable value figure x 10 is a reasonable assumption of the property's open market value.

A similar local property to the one in question had a rateable vale of £24,500, and was sold for £250,000

[labman]

Re: Investment property valuation

Seems reasonable. It is an area I confess to knowing nothing about, but I would imagine it would be heavily influenced by the area, even when working on percentages.