Commercial marinas are to be valued using the income approach to value. Only the income attributable to the real estate is to be capitalized into value. Business income will not be considered in the valuation process. The capitalization rate for marinas should be derived from a careful review of typical marina market data. Care must be taken when separating business income and expense from the total reported income and expense. Income attributable to the rental of support buildings - restaurant, retail structures, manufacturing structures, office, etc., should be used to value those structures. If income data is unavailable, economic income and expense should be estimated or a subpoena should be issued. If the support buildings are not rental properties in nature, the cost approach to value can be used to value their proportionate share of the total value. The following example will explain the valuation of the component parts of a typical marina.

EXAMPLE:

The example marina contains 165 slips. There are 3.5 acres of land devoted to the marina and storage operation. There is one office building containing 7,500 square feet and one shop building containing 2,000 square feet. 500 square feet of the office building are used to manage the marina operation.

FIELD OPERATION

 

108 slips rent for $1,500 per year

12 slips rent for $2,000 per year

45 slips rent for $3,000 per year

Yearly vacancy of 15% on slips

Office rents for $8.00 square feet

Yearly vacancy of 5% on support buildings

Additional income from dry storage approximately $14,000 per year

Owner occupied shop area for boat repairs

OFFICE INFORMATION

 

M/S workup of improvements = $450,000

Cap rate of 9.5% from similar properties

Excess developable land from sales = $100,000 per acre

Expense for slips from Income and Expense Questionnaire $750 per slip

Office expenses from Income & Expense Questionnaire $1.25 per sq. ft.

Comparable shop area rental $6.00 sq. ft.

Expense for shop area $.50 sq. ft.

WORKUP

Item	Units	Rates	Income
Slips	108	1,500	162,000
	12	2,000	24,000
	45	3,000	135,000
Office	7,000 (500 Marina)	8.00 SF	56,000
Shop	2,000	6.00 SF	12,000
Dry Storage			14,000
TOTAL GROSS POTENTIAL INCOME FROM REAL ESTATE			403,000

VACANCY

Slips	321,000	15%	48,150
Office	56,000	5%	2,800
Shop	12,000	5%	600
TOTAL VACANCY			(51,550)
GROSS EFFECTIVE INCOME			351,450

EXPENSES

Slips	165	750	123,750
Office	7,500	1.25	9,375
Shop	2,000	.50	1,000
TOTAL EXPENSES			(134,125)

NET OPERATING INCOME	217,325
INDICATED VALUE 217,325 / 9.5 ÷ 1.2 (Taxes)	2,031,070
INDICATED VALUE OF IMPROVEMENTS (M/S)	450,000
INDICATED LAND 1 ACRE @ 100,000	100,000
TOTAL LAND VALUE	1,681,070
TOTAL VALUE - LAND ÷ IMPROVEMENTS	2,131,070

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