Fundamentals of Real Estate Appraisal (Real Estate Appraisal) (Fundamentals of Real Estate Appraisal)

Fundamentals of Real Estate Appraisal (Fundamentals of Real Estate Appraisal) Using an effective blend of theory and practice, this best selling textbook provides a strong foundation for understanding today’s ever changing appraisal marketplace.
Customer Review: It’s a toughie.
This is the text book that was assigned to my class, and I am taking an at-home course. I don’t know if these guys are covering everything or not, but I can tell you this: they sure don’t know how to write clearly. Sentences are long-winded and convoluted. I read each sentence over and over just trying to figure it out. I am taking notes by re-writing every paragraph. Appraisal school is difficult enough without having to decipher and translate the textbook into plain English. Today’s example:

“The amount of the expected annual ‘effective gross income’ from the property, estimated by subtracting aniticipated vacancy and collection losses from potential gross income”.

I translated that to:

“Effective Gross income equals potential gross income minus (anticipated vacancy + collection losses).”

It makes for very tedious studying.

DVD Success Series: (Real Estate Appraisal) Real Estate Investor’s College

DVD Success Series: Real Estate Investor’s College The DVD Success Series is a premium line of personal productivity recordings featuring acclaimed content from renowned motivators and success coaches, and designed for people on the move.

Ever wished you had the time for a one-on-one, in-person seminar led by a world authority on real estate prosperity? With Real Estate Investor’s College on DVD, property investment guru Dolf de Roos demonstrates field-tested strategies and insider techniques designed for novice and seasoned real estate investors alike. This six-DVD suite offers an in-depth video compendium of how-to tips for creating and perpetuating property income, then allows you to sit in on a series of international question-and-answer sessions featuring specific real estate queries from program participants. Dolf de Roos’ Real Estate Investor’s College on DVD: the best seat in the house, providing a private audience with one of the world’s premier investment authorities.

6 dynamic video seminars presented by Dolf de Roos
- Real Estate Riches (1 DVD): Dolf de Roos’ comprehensive, critically acclaimed presentation originally broadcast on pay-per-view, offering field-tested techniques for creating wealth through property. - Discussions with Dolf (5 DVDs): A unique global forum offering real-life answers to specific real estate queries posed by program participants from New York to New Zealand, providing continuing real estate education in an illuminating Q&A format.

Mary Iager (Real Estate Appraisal)

Mary Iager
Baltimore Sun - Iager and her husband started a land development, real estate and appraisal business after they retired. Mrs. Iager had attended Strayer Business College in Baltimore after high school. Services will be held at 11 a.m. Wednesday at St. Paul’s Lutheran

Iowa business briefs: State has wettest week since 2004
Des Moines Register - Gene Nelsen has formed a commercial real estate appraisal company, Nelsen Appraisal Associates Inc. His name was spelled incorrectly in Monday s newspaper. From Register staff and news services CONVERSATION STANDARDS The Register’s standards: What we

Real Estate Valuation (Real Estate Appraisal)

>

Real estate valuation for single family homes is typically done by using comparable sales. With income properties this just doesn’t work well. Imagine if you are looking at a 24-unit building. It would be difficult to find similar ones nearby that have recently sold.

It’s also not ideal to use replacement costs for income property appraisal. How do you figure replacement cost if there is no land for sale nearby with proper zoning? This is used as a secondary method, though, and can tell you if maybe you should be building instead of buying.

Real Estate Valuation By Cap Rate

Income properties are bought for the income. Income, then, is what is used to determine value. The rate of return investors in a given area expect gives you the capitalization rate, or “cap rate” for the area. This is what you use to accurately appraise an income property. Below is a somewhat simplified explanation.

The process begins with the gross income of a property. You then subtract all expenses, but not loan payments. For example, if a building’s gross income is $82,000 per year, and the expenses $30,000, you have a net (before debt-service) of $52,000. You then apply the capitalization rate to this figure.

Suppose the acceptable cap rate in the area is .10, for example (ask a real estate agent), meaning investors expect a return of 10% on the value of the property. You simply divide the income of $52,000 by .10. $520,000, then, is the indicated value of the building. Suppose the usual rate is .08, meaning investors in the area expect an 8% return. Then the value would be $650,000.

Easy Real Estate Valuation?

Take net income before debt-service, and divide by the “cap rate:” It’s a simple formula. However, the tough part is getting accurate income figures. Did the seller show you ALL the normal expenses? Did he and exagerate the income? Suppose he stopped repairs for a year, and also showed you the “projected” rents. In that case, the income figure could be $15,000 too high. The building would be worth $187,000 less (.08 cap rate) than your appraisal shows.

One thing smart investors do when buying, is to separate out income from vending machines and laundry machines. If these provided $6,000 of the income, that income would add $75,000 to the appraised value (.08 cap rate). Instead, do the appraisal without this income included, then add back the replacement cost of the machines (probably much less than $75,000) to arrive at a valuation.

Of course, you should be careful with any real estate appraisal method. There is no perfect appraisal method, and all are only as good as the figures you plug into them. If used wisely, though, appraisal by capitalization rates is one of the most accurate methods of real estate valuation.

About the Author

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com