boarding house valuation

hey guys

just curious as to how boarding house would be valued? Would it based on the asset or the income it generates?

Looking at few boarding houses it looks like they do it based on the income it generates. Where net income is 120k, they would value this at 2m. Which mans the net return is 6%.

Anyone dealt with this? anyone own a boarding house where the would like to share what valuations they got based on net income?

 

That sounds like just a basic cap rate valuation, which is often a simple starting point for valuing something like a boarding house.

 

It's called as a Going-Concern valuation. They base it on a few things...like the Cap rate @thatbum mentioned. But also on $/sqm and/or dollars per room...normally erring towards $/sqm. They will benchmark it against recent sand bring their assessment back to $/sqm, come up with a range and adopt the middle of the range. Sometimes they may provide an alternative use value too (ie if its converted to a home, child care centre etc).