Single & Multi-Tenant Retail Buildings

The building was purchased for $3,600,000. Located on a .68 acre tract, our analysis indicated that 20%, or $720,000, should be allocated to the value of the land, with the remaining $2,880,000 allocated to the improvements. The 6,900 square feet building contained five retail tenants. During our visit to the property we identified site improvements including concrete paving, sidewalk, landscaping, parking lot signage and striping, a masonry dumpster enclosure, and a large monument sign. Our walkthrough of the tenant suites revealed additional short-life depreciable assets such as VCT flooring, food and beverage service counter, special-use plumbing, electrical, and ventilation serving a commercial kitchen, decorative light fixtures, promotional wall covering, and several other decorative features which qualified for accelerated depreciation. As a result of the study we were able to segregate the $2,880,000 improvement/depreciable basis into the following depreciation classes:

5- year: $431,927
7- year: $8,252
15- year: $517,242
39- year: $1,922,579
TOTAL: $2,880,000

Again, with 100% Bonus Depreciation the net first year depreciation was $1,004,736, with a first year tax savings of $371,752 and a payback ratio of 93 :1.