Mar
31
It’s also not ideal to use replacement costs
March 31, 2010 | Comments Off
It’s also not ideal to use replacement costs for income realestate appraisal. The building would be worth $187,000 less (.08 cap rate) than your appraisal shows. You then apply the capitalization rate to this figure. You simply divide the income of $52,000 by .10. You then subtract all expenses, but not mortgage payments. It would be difficult to find similar ones nearby that have recently sold. Suppose the usual rate is .08, meaning investors in the area expect an 8% [...] In that case, the income figure could be $15,000 too high.
West Los Angeles Homes
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