It’s tempting to rush through a property analysis by simply reviewing the broker’s sell sheet, plugging the data into your favorite software program and printing the results. You’re done, right?
We’re not saying the seller isn’t providing accurate income and expense data, but is he or she giving you a complete picture of all the issues? Consider such questions as:
- What is an appropriate cap rate for the market in which the property is located; and more specifically, what’s the prevailing cap rate for the particular sector, such as multi-family or self-storage?
- What seems like a realistic assumption for revenue and expense growth over time?
- How have vacancy rates been trending for the area, and what might those trends say about future leases, renewals, and demand for space?
You’ll probably need to look beyond the owner’s statement to build your best property analysis and thus create your best chance at a successful investment. Thankfully, you can find a number of sources online to help you achieve accuracy, and along with it, some peace of mind. You can find data on:
- Metropolitan and submarket area cap rates
- Average rents by market sector
- Vacancy rates
- Number of units available and sold
- Sales and rental comps
- Custom reports based on your subject property
The following are some of the best-known sources of data:
You’re probably already familiar with this site, at least in regard to its home value estimates. The focus here is residential but investors can benefit from their extensive rental information, which is provided by county, metro area, city, zip code, and even neighborhood. You download data in Excel format. We found their series of 5 to 7 years of data particularly useful for evaluating rental trends.
You can also learn about their methodology here.
Reis has been a source of commercial real estate data for nearly four decades, and say they are a “…source for property and market intelligence, including vacancy rates, rent levels, cap rates, new construction, rent comparables, sales comparables, valuation estimates, and capital market trends across eight major commercial real estate sectors.
You can get more info about their sales comps and rent comps services, including sample reports. There is also a link on those pages to request a free report.
Really big data commercial real estate here, for owners, brokers, appraisers, lenders, even institutional investors
They say you can search up to 1 million sales records, across all property types at http://www.costar.com/products/costar-comps; or access property-level data, including vacancy, rents, sales comps for multifamily, office, industrial, or retail property at http://www.costar.com/products/costar-market-analytics.
Compstak serves up office, retail and industrial lease data for “leading institutional investors, lenders, and owners across the US and UK.” Subscribe to their entire database or, if you are broker, appraiser or researcher, trade your own data for theirs and gain access to Compstak data for free.
Choose from one of three report types: Investor Survey, Developer Survey and Market Survey for quarterly data on cap and discount rates, vacancy, expense ratios and more for regions and metro markets across the US. At the time of this writing, subscriptions are $100 per office per survey per year.
Real Capital Analytics
From macro trends to extensive data on individual properties, Real Capital Analytics offers data on “$18 trillion of sales, recapitalizations and financings.” Contact them for pricing.
Redfin is a residential brokerage firm but offers a wide variety of property sales and trend data. Of particular note is their annual report of the “Hottest Neighborhoods in the US.”
While you may not be an investor in single family homes, consider that the market for your commercial property is linked to the health of the local residential market.
Gain access to their database of 1.6 million sales listings. Cost is $175 per month. They also offer, at no charge, sales and lease trends for hundreds of localities across the US. See http://www.loopnet.com/markettrends/
What data sources do you use? Share your thoughts by commenting below.