Posted by ray@lcorn on November 23, 2004 at 11:27:13:
IB,
The short answer is both… assuming this is a commercial appraisal, the appraiser will use three approaches to value; income, replacement cost and comparable sales. The square footage of the entire building is a factor in the latter two.
The most weight is usually given to the income approach, meaning the NOI will be normalized, then capitalized using loan rates and investor equity returns prevalent in the market for the property type, location, age and condition.
Appraising mixed-use comm. prop? - Posted by IB (NJ)
Posted by IB (NJ) on November 23, 2004 at 10:37:16:
I’m looking at an 18-unit mixed use property consisiting of 7 stores and 11 residential units. Will this be appraised according to it’s NOI or will the square footage of the building be factored in due to the existence of the retail stores?
Ray is correct, but also note the NOI* cap rate = value may be divided out by different cap rates per different income streams. mine was, as well they used differing vacancy factors by rental segment, etc