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In general those properties with improvements are not improved at <br /> highest and best use or are significantly under utilized in terms of <br /> land size. <br /> The; data were analyzed on a per acre basis including improvements, <br /> and lead the writer to a conclusion of value for the subject at the <br /> rate at $130,000 per acre. <br /> MARKET APPROACH SUMMARY <br /> 6. 12 Acres x $1309000 = $795 ,600 <br /> MARKET APPROACH INDICATION $795,600 <br /> INCOME APPROACH <br /> The income approach to value converts net income attributable to the <br /> real estate into an indication of property value by the use of a <br /> capitalization rate . After establishing gross economic rent , <br /> deductions are made for vacancy and all operating expenses . The <br /> remaining net income is then capitalized with an overall <br /> capitalization rate which is the prevailing market relationship of <br /> net operating income and sales prices . The overall rate is the <br /> direct expression or measure of that relationship. <br /> GROSS INCOME <br /> The subject property is used in conjunction with the Mid-Continent <br /> Mining Operations and no formal lease arrangement or rent exists . <br /> For that reason gross income was estimated from rents obtained by <br /> other properties in the area. A rent summary may be found in the <br /> addenda. <br /> After consideration of the type of space to be rented together with <br /> the large storage yard, the appraiser estimated that the buildings <br /> would rent at an overall average rate of $3.00 per square foot. <br /> The fenced storage area was estimated to contain 234, 179 square feet <br /> after deductions for the roadway and buildings. The gross rent for <br /> the storage yard was estimated on an annual basis at the rate of 30 <br /> cents per square foot. <br /> Vacancy <br /> In the, application of the Income Approach, it is customary to make a <br /> charge for vacancy and collection loss. It is acknowledged that <br /> during the economic life of a building, there will be some periods <br /> of full occupancy and other periods when vacancy may exceed 10% . <br /> The expression of vacancy in capitalizing income reflects what is <br /> thought to be a "typical" operating year. <br /> It is my opinion that because of the location and type of use, the <br /> property will perform a functional use for many years to come . With <br /> these thoughts in mind , I have projected vacancy during an average <br /> operating year at 5%. <br /> -13- <br />