Land Residual Technique
Technique used to estimate how the value of a parcel of land will affect its ability to support a given commercial improvement leaving sufficient residual net income to maintain adequate profitability. The commercial value of the land must exceed its purchase price in order for there to be sufficient residual income. Capital land valuation is determined by capitalizing the residual net income. Property tax appraisals and condemnation awards normally require the land residual technique. Unimproved land values are determined through this technique and the value of the improvements are added to establish a total improved land value. In computing land residual value, an appraiser values structural improvements at their cost. Costs associated with the building are deducted from net income. The remaining value is residual the land.
Popular Real Estate Terms
(1) The interest rate used to convert future receipts or payments in connection with real estate property to their present value. The cost of capital is used as the discount rate under the ...
Rules regarding day-to-day use of the premises. ...
A building having one house hold on the first floor and a second household on the second floor. ...
Expected selling price of property less costs to sell. It is the net amount received upon the sale of property. gross receivables less allowance for doubtful accounts, representing the ...
Also called purchase money mortgage. A seller's claim to property held by a buyer as collateral for a debt or charge. ...
Sponsor sells interest to real estate investors in one property only. The total amount received from the equity investors is used by the sponsor to buy the property for the partnership. ...
Factor used in present value computations to determine the current value of future cash flows. It is used to get the current value of what the selling price would be when the property is ...
Interest rate on a mortgage is changed periodically based on the change in a general price index to take into account inflation, such as a yearly adjustment. An example is the consumer ...
The term abutting comes from the verb “to abut” and the definition of abutting denotes more proximity than “adjacent”. Abutting is often used in real estate to ...
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