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INCOME APPROACH(cont.) <br /> When dealing with a brand new, highly tech building in a prime location, conceivably <br /> the Capitalization Rate might be as low as 9%. <br /> When dealing with an older property with a high degree of physical deterioration, as <br /> well as functional and economic obsolescence, with a limited potential demand, the rate <br /> conceivably might be as high as 15%. <br /> In the case of the subject property due to its limited potentials that I have outlined <br /> above, I have concluded that a Capitalization Rate of 14%would be the most appropriate. <br /> The following is a Reconstructed Operating Statement, which incorporates the <br /> information that I have just discussed. <br /> RECONSTRUCTED OPERATING STATEMENT <br /> Potential Gross Income <br /> } <br /> 32,518 sq. ft.x$2.00 = $65,036 <br /> Less Vacancy&Rent Loss 30% 19,518 <br /> Effective Gross Income $45,518 <br /> Less Reserves(Repair&Replacement) $10,000 <br /> NET INCOME $35,518 <br /> $35,518/.14 $253,700 <br /> SAY <br /> $254,000 <br /> INDICATED VALUE $254,000 <br /> 28 <br />