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Flashcards in Appraisal - Site Valuation Deck (9)
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1

Land Value Method

G - Ground Rent CAP
L - Land Residual Technique
A - Allocation
D - Development (Subdivision)
E - Extraction
S - Sales Comp

2

Ground Rent Capitalization

Land Rent/CAP Rate

3

Land Residual Technique

Land Income / land cap rate
Land Income = Property net income (NOI) - building net income
Land's income approach

4

Allocation

Sale $ x land ratio (land:improvement)

5

Development (Subdivision)

Large tract divide to small parcel (rarely use)
a. Sale $ - development cost
b. Discount cash flow analysis

6

Extraction

Sale $ - Depreciated Cost

7

Sales Comparison

contributory value

8

Value of land (example)

Cost New Improvement $ $675,000
NOI $33,000 (after improvement completed)
Building CAP = 4.15% Land CAP=3.33%

1. Building income = $675,000 x 4.15% = $28,012.50
2. Land income= $33,000 - $28,012.50 = 4987.50
3. Land Value = $4,987.50 / 3.33% = $149,775

9

Entrepreneur Profit

Final Value - Site Cost - Hard and Direct Cost