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Mid—Continent Resources <br /> July 15, 1986 <br /> Page — 4 — <br /> REVISED INCOME APPROACH (7/15/86) <br /> The first modification in the income approach has been to adjust the rentals <br /> downward from $3.00 per square foot to $2.75 per square foot. The fenced <br /> storage area was estimated to have an average rent at the rate of 30 cents per <br /> square foot. <br /> The vacancy and collection loss estimate remains at five percent. <br /> The current property taxes on the property are $4,823, rounded to the <br /> nearest dollar. The taxes reflect a land only valuation. An examination of <br /> the assessor's record indicates that the improvements have not been <br /> inventoried by the assessor. Since this is an abnormal situation, the writer <br /> estimated the property taxes that would be attributable to the improvements <br /> and adjusted the overall property tax figure upward to $8,160. The remaining <br /> expenses remain the same or at the same rate. The total operating expenses <br /> are equivalent to 18 percent of effective gross income, an increase from 14 <br /> percent in the previous report. <br /> In the capitalization rate development under the 'band of investment' concept, <br /> the mortgage loan rate was reduced to eleven percent from fifteen percent. <br /> The mortgage loan ratio of 75 percent is an increase from 66.7 percent. The <br /> 30 year amortization period remains the same. <br /> The return on equity investment, or cash flow, was increaEed to nine percent <br /> from 5. 5 percent in the original report. <br /> Applegate & CO. Real Estate Appraisers <br />