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Please answer all 5 parts of this question, Failure to do so will result in a downvote! The subject is: Valuation using Income Approach An
Please answer all 5 parts of this question, Failure to do so will result in a downvote!
The subject is: Valuation using Income Approach
An appraiser appraises a food court and lounge and provides the following assessment:
- The building consists of 2 floors with the following (6) properties:
- 1st floor (3) fine dining restaurants:
- (1) - Charles Mulligans Steakhouse - rents for $3250/month
- (2) - Toms Bistro - rents for $2400/month
- 2nd floor (1) bar/lounge and (2) fast food joints (same company)
- Snakehole Lounge - rents for $3200/month
- (2) Paunch Burgers (fast food) - rents for $1200/month
- 1st floor (3) fine dining restaurants:
- Vacancy and Collection Losses: 6% per year
- Miscellaneous Income: $1550 per year
- Operating expenses: 30% per year
- Capital expenditures: 6% per year
- What is the estimated Potential Gross Income (PGI)?
- What is estimated Effective Gross Income (EGI)?
- What is the estimated Net Operating Income (NOI)?
- Suppose the average overall capitalization rate for the comparable properties is 7.65%. What is the indicated value of the subject property using the cap rate?
- Now suppose this is a small income-producing property and the average Effective Gross Income Multiplier (EGIM) for the comparable is 8.64. What is the indicated value using the EGIM?
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