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  • ILLUSTRATION - RESIDUAL TECHNIQUE by PDF

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    George Poligratis Rico
    250 Ansichten12 Seiten
    This document illustrates different techniques for valuing a property based on its income and market assumptions. It uses a sample property with a net operating income of $3,833,000 to calculate value under building residual, land residual, and property residual techniques. For building residual, it determines building value then adds land value to get total property value. For land residual, it determines land value then adds assumed building value. For property residual, it directly capitalizes net operating income or uses a present worth calculation to value the total property. The techniques provide a range of estimated property values from $44-56 million.

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    This document illustrates different techniques for valuing a property based on its income and market assumptions. It uses a sample property with a net operating income of $3,833,000 to calculate value under building residual, land residual, and property residual techniques. For building residual, it determines building value then adds land value to get total property value. For land residual, it determines land value then adds assumed building value. For property residual, it directly capitalizes net operating income or uses a present worth calculation to value the total property. The techniques provide a range of estimated property values from $44-56 million.

    Copyright:

    © All Rights Reserved
    Als PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    250 Ansichten12 Seiten

    ILLUSTRATION - RESIDUAL TECHNIQUE by PDF

    Hochgeladen von

    George Poligratis Rico
    This document illustrates different techniques for valuing a property based on its income and market assumptions. It uses a sample property with a net operating income of $3,833,000 to calculate value under building residual, land residual, and property residual techniques. For building residual, it determines building value then adds land value to get total property value. For land residual, it determines land value then adds assumed building value. For property residual, it directly capitalizes net operating income or uses a present worth calculation to value the total property. The techniques provide a range of estimated property values from $44-56 million.

    Copyright:

    © All Rights Reserved
    Als PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 12

    ILLUSTRATION - BUILDING RESIDUAL

    TECHNIQUE
    ASSUMPTIONS
    Land Value (from market)
    Net operating income

    P 40,000,000
    P 3,833,000

    (1)
    REL of Bldg
    35 years
    Interest Rate (from market) 6 %
    Net Operating Income
    P 3,833,000
    Less: Return on land
    (P 40 M X 6%)
    2,400,000
    NI attributable to BLDG.
    P 1,433,000

    ILLUSTRATION - BUILDING RESIDUAL


    TECHNIQUE
    ASSUMPTIONS
    CAPITALIZATION RATE:

    (2)

    Interest Rate
    6.0%
    Provision for depreciation (Recapture or
    Capital recovery life 35 years 2.857% = 8.857%
    Indicated Building Value = P 1,433,000/8.857

    =
    P 16,179,293

    PLUS LAND
    40,000,000
    INDICATED PROPERTY VALUE =
    P 56,179,000

    ILLUSTRATION
    BUILDING RESIDUAL TECHNIQUE

    Land Value (from market )

    P 40,000,000

    REL of Bldg

    Interest Rate (from market) 6 %

    Net Operating Income

    35 years

    (3)

    3,833,000

    Less: Interest on land


    (P 40 M X 6%)

    NI attributable to BLDG.

    2,400,000
    P 1,433,000

    ILLUSTRATION
    BUILDING RESIDUAL TECHNIQUE
    CAPITALIZATION RATE: 8.857%
    BUILDING VALUE:
    (4)

    P 1,433,000 x present worth (P.W.)

    Factor for 35 years discounted

    at 8.85 (Table No.5)

    P 1,433,000 x Factor 10.7114


    P 15,349,436
    Plus: Land Value
    40,000,000
    I PV
    P 55,349,436
    By Annuity Approach

    COST APPROACH
    BLDG. VALUE (Cost Approach) P 35,000,000
    Net Operating Income
    P 3,833,000
    REL of Bldg.
    35 years
    Interest rate (from market)
    6%
    Net Operating Income
    P 3,833,000
    Less: Return on & of bldg.
    Investment (35,000,000 X 8.857) 3,099,950

    RESIDUAL TO LAND
    NET INCOME RESIDUAL TO LAND
    P

    Land Value: P 733,050 / 6%

    Plus: Bldg Value

    733,050

    P 12,217,500
    35,000,000

    INDICATED PROPERTY VALUE P 47,215,500

    ILLUSTRATION-LAND RESIDUAL
    TECHNIQUE
    Net Operating Income
    P 3,833,000
    Less: Interest and Recapture on

    assumed building value

    P 35,000 Factor 10.7114 1/x = 0.093358

    3,267,547

    ILLUSTRATION-LAND RESIDUAL
    TECHNIQUE

    INCOME ATTRIBUTABLE TO LAND


    Land Value P 565,453 6%
    Plus: Building Value

    INDICATED PROPERTY VALUE


    By Annuity Approach

    565,453

    P 9,424,217
    35,000,000

    P 44,424,217

    ILLUSTRATION PROPERTY RESIDUAL


    ASSUMPTION
    NET OPERATING INCOME
    Overall rate (from market)

    P 3,833,000
    7.5%

    Indicated Property Value 3,833,000 / 7.5%


    IPV, SAY

    P 51,107,000

    (Direct Capitalization Approach)

    ILLUSTRATION PROPERTY RESIDUAL


    NET OPERATING INCOME

    P 3,833,000

    Present Worth net income for 35 years

    @ 7.5% overall rate

    P 3,833,000 x present worth

    (P.W. ) factor for 35 years Discounted at 7.5%

    P 3,833,000 x factor 12.2725

    P 47,040,493

    Plus: Reversionary value of land


    Assumed land value (by market)

    P 40,000,000

    Reversionary value of land:

    40,000,000 x reversion factor

    For 35 years discounted at 7.5%

    40,000,000 x factor 12.2725 1/x

    = 0.0815 (table 4)
    3,182,400

    I P V, SAY
    P 50,223,000

    COMPARISON TECHNIQUES

    BUIDING RESIDUAL:

    Straight Line

    Annuity
    LAND RESIDUAL:

    Straight Line

    Annuity
    PROPERTY RESIDUAL:

    Direct Capitalization

    Annuity

    P 56,179,000
    55,395,000
    P 47,218,000
    44,424,000
    P 51,107,000
    50,223,000

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