Hi
How do we value this property?
We have a 1500ac+ property consisting of two popular self-contained tourist accommodation venues, a large shed with 3phase power, owners quarters (small farm house, not attractive), 200ac of grazing/farming land (organic certificate pending) and another 1300+ of very attractive and unusual forest landscape serviced by over 20km of 4wd and walking tracks. Heaps of wildlife, a few minutes from major hwy, 15 min from nearest town in an area of growing interest.When we started 10 years ago it was a clapped out sheep farm with a shed and the farm house. Everything else including major dam & road works have been done by us. The tourism is only recent, runs at over 60% occupancy and netted $40k in the last fin year. A third venue is in the pipeline and we expect $100kpa in 3yrs. Additional income is made through milling timber and making furniture.
Blocks of this size in the area are selling for between $500 per acre & $1500 per acre as either bush blocks (no improvements) or traditional cleared agribusiness farmland frequently without buildings. There is nothing like ours to compare to.
How do we value our improvements? We milled the timber used and welded the steel ourselves so trying to calculate by expense to us won’t work. We also want to add in all our equipment – dozers, timber mill, welding equip, accomm stuff – how do we do value them? We do not trust the local agents to understand the non-agricultural business side of the property and the value of the natural attractions and, of course, the land value for tax does not represent the market value.
Thanks for your help,
Jane.Hi Jane,
You are best to gain advice from a professional valuer who values both commercial assets (ie, equipment and income generating works) and residential property.
These are independent valuers who offer their service for a fee. Look for someone who is accredited or have a certified valuer’s license.Why do you want to value?
If to sell then you can use a real estate agent and see what you can get for it.
If for tax reasons then you will need a registered valuer.
If for borrowing then you will need to talk to a bank who will instruct a valuer.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Would be fairly difficult with such a diverse usage and varied improvements
I could only suggest that a true value could only be arrived at from a registered valuer experienced in both rural & commercial properties, this could be $$$++
The valuer would look at possible value as just a farm but also include the Tourist facilities, probably on a capitalised basis or on a replacement cost basis.
However don't expect much value being placed on your plant and equipment and also the 4wd & walking tracks etcI’d suggest using a valuer also. Select one who has a regional base. Contact the Australian Property Institute for guidance.
Are you looking to just value the property with the improvements or as a business as a going concern (with its attached cash flow)? This will have a major influence on the valuation.
Thanks all for your input, I really appreciate it. We’ve never sold anything like this before.
We want to value it for sale. We would like to include the going business concern. We’ve got bookings, a good online presence and we attract media attention. We’ve been operating for 2 years with one venue, 18months with the other. A new owner would be able to make money from day one. There is much room and demand for another one if not two venues.
Regarding valuers and agents. We are in a rural area. We know some of the local agents personally and think they are too dumb, for want of a kinder word, to appreciate what we think are the property’s values. They know how to sell paddocks that have been supered for decades, not a mix of lifestyle, organic and tourism with a mind-tripping landscape. Ours property falls definitely into the ‘eco’ category and they wouldn’t have a clue. There’s nothing in the region like we have.
Considering the above, should we employ a city/coastal agent who better understands our potential market (city/coastal folk looking for a lifestyle business) or should we employ a local agent who knows the locale but won’t really understand our property or our potential market?
Many thanks,
JaneAsking a silly question? Why do you want to rid yourself of a cash generator?
Are you looking to retire or to move onto other projects?
If you need cash for additional projects, why not borrow against the equity you have built up to 'x'ly your IP projects?
Failing that, if you still want to sell up and get out, why not borrow, use the equity while you wait for a buyer…it sounds like this will be a narrow market and will take some time to sell?You might consider one of the larger city agents like CBRE, Knight Frank or Jones Lang Lasalle etc, each who handle larger commercial/tourism type properties.
They each have specialist consulting & valuers services.
They may consider a conjunction sale with one of the local agents but if locals aren’t the intended market, they will be able to garnish national campaigns.
colinnewland wrote:Asking a silly question? Why do you want to rid yourself of a cash generator?
Are you looking to retire or to move onto other projects?It’s a very relevant question, Colin. And the answer is: downsizing to other projects. An unexpected but desired opportunity presented itself recently that is both a downsize and perfect for our long term goals. And as much as I love our lifestyle (a 20hr week each for two people), I frankly find it a bit boring and I want more challenge. This new opportunity will give us the challenge and return we want.
Quote:If you need cash for additional projects, why not borrow against the equity you have built up to 'x'ly your IP projects?
Failing that, if you still want to sell up and get out, why not borrow, use the equity while you wait for a buyer…it sounds like this will be a narrow market and will take some time to sell?Love to. But what sort of loan could we get? We can’t make more than $1000pm in repayments until we sell our main property .We need $500k to buy into the opportunity we have found. How can we make this happen with equity without being forced into a firesale in 1-3yrs time if we don’t sell for our desired amount? Is there a low-stress work-around for bridging loans and the like?
Regards,
JaneThanks for those references Scott. Am looking!
I spoke to a local agent who gave me a figure for land-only, then commented that I knew more about the local property market than he
. I added the replacement cost of the buildings, used a formula to calculate the business value as a going concern and then rounded up to take account of the other included assets. The final figure was less than I hoped for, but reasonable and felt accurate.
Thanks everyone for your help.
Cheers,
Jane
. I added the replacement cost of the buildings, used a formula to calculate the business value as a going concern and then rounded up to take account of the other included assets. The final figure was less than I hoped for, but reasonable and felt accurate.You must be logged in to reply to this topic. If you don't have an account, you can register here.
