Appraisal Matters

It occurred to me while I was replying to a comment on my “Marina Unit of Measure Fallacy” blog that price per slip is even more potentially misleading than the items I itemize. When does the price per slip not apply?
When the purchaser wants to use the site differently (condo development or new boat dealership), [...]

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During the past few years of explosive growth, the highest and best use for marinas very often was NOT as a marina.  Many traditional marinas changed to mixed use or condominium developments, especially in the southeast.  Now that that the real estate bubble has burst, development is often not the highest and best use of [...]

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When functional obsolescence is present at a marina, it is usually one of two types:  Those that affect the marketability and value of the marina (which I call supply-side obsolescence) and those that are recognized by boaters (demand-side obsolescence; again my term).
From marina surveys I’ve recently performed, there is a clear and almost universal pattern [...]

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Many marinas are feeling some effects from the current “recession”.  Third-tier marinas, those in rural locations (defined as not within walking or biking distance of a town or city with a variety of things for boaters to do) are affected the most… by far.  Here are some trends I’m seeing from our marina surveys:

Vacancy rates [...]

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Most people believe that the days of “cheap gas” are over.  Some of the reasons include demand from China and other developing nations, the perception that the oil reserves in the Middle East are running out and an increasing dependence on foreign oil, to name just a few.
High fuel prices are causing difficulties for some [...]

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Eileen and I have been extracting cap rates and operating expense ratios from sales for almost a decade and a half together.  During that time, I’ve reviewed an untold number of marina appraisals and have spoken with dozens and dozens of lenders and appraisers about the same thing - the operating expense ratio.  It’s time [...]

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I’ve worked with John for 13 years and although I am an appraiser, for marinas I am a data gatherer and general muse for him.  I’m also the one that begs and pleads for data in a market that is very closed to providing income information.
Over the years we’ve come across tons of marinas that [...]

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Over the past month, we’ve gotten a huge number of bid requests for marina appraisals all over the country.  I inspected a marina yesterday that typifies the problem.
Marinas are facing top-down and bottom-up pressure that’s squeezing profitability.  From the top-down perspective, the reduction in slip demand is causing higher vacancies in many marinas.  Many marina [...]

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Appraisers, lenders and brokers have an unfortunate tendency to focus on price per slip as the unit of measure for marinas. Instead of simply getting cap rates from sales, too many appraisers do a full sales comparison approach and use nebulous, mere guesswork adjustments to derive a uniform price per slip range.
Here are the [...]

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We’ve had some interesting round table discussions about reserves in the office. The big question is why don’t we see reserve line items on income statements or as a separate deposit/bank account on the balance sheet? For marinas, this is an even more important question because it seems that lenders don’t understand how [...]

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