After a long, long lull in subdivision development appraisals, I've received three assignments in the past several weeks for existing or proposed subdivision developments. But don't pop the cork on the champagne just yet. In my view, the jury is still out on the economic feasibility for residential subdivision development in most areas of Hardin … [Read more...]
Equity Dividend Rates – Downloadable Spreadsheet
An equity dividend rate, also known as cash-on-cash, is the annual rate investors expect to receive on their equity investment. For example, suppose I invest $10,000 and expect to receive $1,500 annually from an investment. It may be calculated as: $1,500/$10,000 = .15 or 15%. There are a few different methods to estimate what a typical market … [Read more...]
Financially Feasible Rent Level Analysis
Calculating Economically Feasible Rent Levels In my previous post, I discussed the task of quantifying economic obsolescence or benefit that affects real estate. As I noted, the first step to evaluate the impact is to calculate the level of rent at which development of specific property types is financially feasible. Doing this requires … [Read more...]
Measuring Economic Obsolescence or Benefit
What is Economic Obsolescence or Benefit? Say what? I'm sure that will be the response of some reading the term 'Economic Obsolescence' for the first time. Just stay calm a second and I'll explain. Basically, obsolescence is a word that describes the state or process of something becoming obsolete. Think eight track tape players or rotary phones. … [Read more...]
Using Multiple Linear Regression to Appraise Real Estate
Those of you who took statistics in college probably remember the class with varying degrees of fondness. Personally, I loved my statistics class. I realized at the time that multiple linear regression was the perfect tool to quantify the effect of various property characteristics on the overall value. The theory of statistics is the mathematical … [Read more...]
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