There are many ways to value your real property—
2. by using a cost approach—that is, determining the cost to replace/reconstruct an identical structure on a similar piece of property with identical zoning that it is comparable to your existing building less accumulated depreciation
3. by using an income approach—dividing expected NOI (net operating income) by the cap rate for this type of use and this type of property in that location or close to it to obtain a FMV (fair market value) for a property after which two other adjustments may be applied—subtracting the marginal cost (investment required to bring the property into productive use) from FMV and discounting this revised FMV to today to obtain its present value if the development requires more than a few months (or a year at most) to bring to completion and to generate revenue
4. by spreadsheet analysis using IRR, Internal Rate of Return and comparing it to IRRs for other investment opportunities
5. by obtaining an appraisal from an accredited appraiser
6. by what a willing buyer and willing seller agree to, both being knowledgeable and having adequate access to reasonably complete information without undue time pressure
7. by looking at assessed value or by dividing annual realty taxes by the applicable mill rate
8. by using a residual approach (usually to determine land value) by subtracting all costs from development yield (sales) to ascertain a price you would be willing/able to pay for a site, often discounting said price to ascertain its PV, present value, because it is a future value obtained a number of years out—note developers may also apply a further discount to obtain an EV, expected value, that is, assign a probability of success and multiply that by PV; they do this because land development is a risky process involving both public and political input on zoning, site plan and other related matters in a lengthy approval process…
9. by experience.
FOR REAL ESTATE INVESTMENT AND BUSINESS COACHING THAT’LL HELP YOU PROVIDE FOR YOURSELF AND YOUR FAMILY FOR 3-GENERATIONS, PLEASE CONTACT:
Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD
Real Estate Investment and Business coach
Ottawa Senators founder
ROYAL LePAGE Performance Realty broker
BOOK YOUR FREE CLARITY CALL WITH PROF BRUCE NOW, https://brucemfirestone.com/coaching/prof-bruce-real-estate-investment-and-business-coaching/talk/
• MAKING IMPOSSIBLE POSSIBLE
• FREEDOM VIA REAL ESTATE INVESTMENT AND PB4L, PERSONAL BUSINESS FOR LIFE
• FEHAJ, FOR EVERY HOME A JOB, FEJAH, FOR EVERY JOB A HOME
• MAKE YOUR HOME WORK FOR YOU, INSTEAD OF YOU WORKING FOR IT
• HIGHER ROI NOT JUST FOR OWNERS AND INVESTORS, BUT FOR TENANTS, GUESTS, VISITORS, NEIGHBORHOODS, COMMUNITIES, TOWNS, VILLAGES, CITIES AND THE ENVIRONMENT TOO
Note—aim for a 6% pa cap rate or more going in (ie, before animation!) before you purchase any property.
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.