Income Property III
- Topics:
- Property Management
- Tags:
- Chet Boddy,
- Finance,
- Income,
- Operational Accounting
- Source:
- Chet Boddy
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Overview: The income approach, sometimes called the income capitalization approach, is a method of estimating value based on money one expects to receive in the future. This method works best for standard income properties that are fully rented and have been producing income for some time. These are sometimes called “stabilized” income properties. The income approach may not be that reliable for owner-occupied real estate, because owners don’t pay rent. Also, the income approach may be less reliable for vacant, unique, unusual or mixed-use properties. A reconstructed operating statement is a simple spreadsheet that lists the anticipated first year income and expenses for commercial real estate. It is a useful tool for evaluating income property. Market rent is the rental income that a property would most probably command in the open market. The best way to estimate market rent is to look at current rents paid for comparable space. A lease is a written document that transfers the rights to use and occupy real estate from the owner to a tenant for a specified period of time in exchange for rent. Commercial floor area is measured differently than residential floor area. Residential gross living area is normally calculated by measuring the exterior dimensions of the house less non-livable areas such as garages and storage spaces.
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Format: HTML | Date: Jan 2003 | Pages: 1
