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Need advice on evaluating asset price for eminent domain based on income..

 
Old 07-12-2019, 12:12 PM
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gixxerbill
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Default Need advice on evaluating asset price for eminent domain based on income..

As some of you know harris country is eminent domaining some of my storage facility to make a damn ditch bigger. I know I can charge them the market value of land and the buildings but I am unsure is what is fair compensation for loss of future income. After meeting with them they want to take a row of building around 4200 sq ft that has been renting for about 36k a year for the last 30 years. What is the present market value of that income stream that I should be able to ask for? I don't know how to figure that. I mean is it for 10,20, 30 future years see what i mean? Plus you have rent increases every couple of years.
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Old 07-12-2019, 12:14 PM
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you're going to get what they want you to get
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Old 07-12-2019, 12:17 PM
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Originally Posted by Swany00 View Post
you're going to get what they want you to get
you could have said you just don't know.
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Old 07-12-2019, 12:21 PM
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Originally Posted by gixxerbill View Post
you could have said you just don't know.
Build a spreadsheet, look at comps, project current and future loses, bring in an appraiser and you'll still get whatever they want to offer. Keep it simple Bill, if they are going to fk you, you're going to get fkd
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Old 07-12-2019, 12:25 PM
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You should be speaking to an Eminent Domain attorney.
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Old 07-12-2019, 12:25 PM
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Bill have you considered hiring a lawyer that specializes in this? I've got one on speed dial for when the county widens my road and has to tear down my building.
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Old 07-12-2019, 12:36 PM
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How much money would you have made without the area they want?

How much did you make on that portion of the property in each of the last, say 5 years (or 7 or whatever number) = annual loss of income.
Take that number x number of future years you'd be losing that income + inflation per year = amount of future loss income.

Then add property value (incl structures). How much would it cost you to buy that amount of land and build a structure on it?

Thats your number
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Old 07-12-2019, 12:37 PM
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typical valuation should be 4-6 times earnings averaged over the last three years, plus goodwill.

edit, this does not include land value or structure(s)

Last edited by flange; 07-12-2019 at 12:38 PM.
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Old 07-12-2019, 12:40 PM
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Originally Posted by Dodosmike View Post
How much money would you have made without the area they want?

How much did you make on that portion of the property in each of the last, say 5 years (or 7 or whatever number) = annual loss of income.
Take that number x number of future years you'd be losing that income + inflation per year = amount of future loss income.

Then add property value (incl structures). How much would it cost you to buy that amount of land and build a structure on it?

Thats your number
that's the question how many future years?
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Old 07-12-2019, 12:40 PM
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Originally Posted by flange View Post
typical valuation should be 4-6 times earnings averaged over the last three years, plus goodwill.

edit, this does not include land value or structure(s)
only 4 to 6 times with at 30 year track record? That BLOWS!!!
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Old 07-12-2019, 12:48 PM
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Tree fiddy
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Old 07-12-2019, 12:52 PM
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$118k
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Old 07-12-2019, 12:52 PM
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Originally Posted by gixxerbill View Post
only 4 to 6 times with at 30 year track record? That BLOWS!!!
its a starting point. think of it this way. you own a business making widgets. year after year, you go to work and run the business. you make x amount of earning every year. you could do it forever, BUT you want other opportunities. a solid buyer will want to negotiate sale price. many businesses are worth 3-6 times earnings, plus inventory, real estate, good will. SOME are worth much more like silicon valley type stuff because of technology or other quantifiable intangible or intellectual property. you simply have land vale and future sales.
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Old 07-12-2019, 12:55 PM
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Originally Posted by flange View Post
its a starting point. think of it this way. you own a business making widgets. year after year, you go to work and run the business. you make x amount of earning every year. you could do it forever, BUT you want other opportunities. a solid buyer will want to negotiate sale price. many businesses are worth 3-6 times earnings, plus inventory, real estate, good will. SOME are worth much more like silicon valley type stuff because of technology or other quantifiable intangible or intellectual property. you simply have land vale and future sales.
but that is the point I am NOT choosing to sell them this property. They are forciing me to sell it to them. I think it should be more than 3 to 6 times.
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Old 07-12-2019, 01:16 PM
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Originally Posted by gixxerbill View Post
I think it should be more than 3 to 6 times.
[Judge Judy]It doesn't matter "what you THINK"[/Judge Judy]
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Old 07-12-2019, 01:36 PM
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Originally Posted by gixxerbill View Post
but that is the point I am NOT choosing to sell them this property. They are forciing me to sell it to them. I think it should be more than 3 to 6 times.
you have choices. you can hire an attorney who specializes in this, or you can take the process on yourself. in the end, you may get more, but after legal costs end up worse. either way a lot will depend on how badly they want the land, how rich the township is, and what they perceive as fair. btw, the bigger dick you are, the more likely that you will get millions in Iraqi dinar
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Old 07-12-2019, 02:26 PM
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Originally Posted by flange View Post
you have choices. you can hire an attorney who specializes in this, or you can take the process on yourself. in the end, you may get more, but after legal costs end up worse. either way a lot will depend on how badly they want the land, how rich the township is, and what they perceive as fair. btw, the bigger dick you are, the more likely that you will get millions in Iraqi dinar
well then I am going to be a big dick...(did that come out right? )
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Old 07-12-2019, 03:32 PM
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Originally Posted by FourPennyDoug View Post
Bill have you considered hiring a lawyer that specializes in this? I've got one on speed dial for when the county widens my road and has to tear down my building.
Will you still have room for your trailer and two cars on the lot?

Originally Posted by gixxerbill View Post
As some of you know harris country is eminent domaining some of my storage facility to make a damn ditch bigger. I know I can charge them the market value of land and the buildings but I am unsure is what is fair compensation for loss of future income. After meeting with them they want to take a row of building around 4200 sq ft that has been renting for about 36k a year for the last 30 years. What is the present market value of that income stream that I should be able to ask for? I don't know how to figure that. I mean is it for 10,20, 30 future years see what i mean? Plus you have rent increases every couple of years.
It varies for different types of business, but I used to sell print shop franchises, both new and existing. On an existing shop, the beginning number in negotiations was the annual gross times the number of years in business with a max of five years. But other facts can add or subtract from that number. How strong the customer list is, retention of customers, payroll, condition of the equipment, etc. Of course, some of those factors don't apply in your case.

But I could also see where it can't be worth much more than it would cost to purchase land and rebuild what you are losing, with some extra for your trouble plus lost business while that process takes place. There is no way they are going to pay you the next 30 years of income from the place. If there is a trade organization for your industry, contact them and see if they have any past experience with a similar situation or can put you in touch with someone who has. Their word may add some more credibility to what you ask for.

Best of luck to you.

Last edited by GotCorvette?; 07-12-2019 at 03:43 PM.
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Old 07-12-2019, 03:37 PM
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Hire an MAI real estate appraiser. They will calculate the value using the income approach and FMV. You need an appraisal to contest the government’s valuation. Your back of the napkin calculation don’t mean ****.
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Old 07-12-2019, 03:48 PM
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thanks for all the advice guys. i appreciate it!!!
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