You are helping a seller client list an office building for sale. It is a single-storey...
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You are helping a seller client list an office building for sale. It is a single-storey building with 24 units. It has a potential annual rental income of $443,000, with a vacancy and credit loss of 6%. There is an additional income of $16,000 from the parking rentals, and the operating expenses are $123,000 per year. The capitalization rates used in the market are between 5% and 6%. The seller wants to know the estimated values based on the two extreme rates in the market. What are the estimated values of the building based on a capitalization rate of 5% and 6%, respectively? You are helping a seller client list an office building for sale. It is a single-storey building with 24 units. It has a potential annual rental income of $443,000, with a vacancy and credit loss of 6%. There is an additional income of $16,000 from the parking rentals, and the operating expenses are $123,000 per year. The capitalization rates used in the market are between 5% and 6%. The seller wants to know the estimated values based on the two extreme rates in the market. What are the estimated values of the building based on a capitalization rate of 5% and 6%, respectively?
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Answer rating: 100% (QA)
To estimate the value of the building we can use the Income Approach which is based on the idea that ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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