Masonry Magazine September 1971 Page. 28
How $100
Becomes $1,000
There are other financial advantages to a concrete masonry building such as low maintenance costs, lower insurance rates, heating and cooling expenses and so forth. Every $100 saved in reducing this type of expense is $1,000 added to the economic value of your property, based on a 10% cap rate.
In other words, you can borrow more money. The more money you borrow, the less money you will have to invest. That's the name of the game. While you are at it, get the longest term possible on your loan because this will reduce your debt service payment and increase your cash flow.
Again, look ahead seven years when it may be economically advisable to sell your building. The prospective buyer will want to know the net operating income to which he may apply a different capitalization rate. If the building is in bad condition and you are experiencing a high vacancy rate, the prospective buyer will very likely increase his cap rate. And the higher the cap rate the lower the economic value and the less money you will receive for your building.
On the other hand, if the building is in excellent condition, attractively designed, and fully occupied, there is very little risk involved in such an investment and the cap rate could be lowered considerably. This would mean you would receive more money for your building at the time of resale.
Thus, concrete block walls can have a profound effect upon the economic value of a building. Concrete block can effect the cash flow for the entire life of the structure to benefit the owner who selects it as his primary building material. Quality is always the best buy, and the message is never clearer than when you become the seller.