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Old 10-13-2011, 06:22 PM
rbrienza rbrienza is offline
 
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Location: Denver
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Default Help in a classification

I need some advice from you my peers.

I need to figure out what classification the building is:

Subject property - Converted SFR brick house build in 1909.

Converted to commercial use ages ago.
USE: Medical Marijuana dispensary - with apartment for owner of dispensary.

Is this a retail store (Sec 13 page 26), is a drug store (sec 13 page 20), is it an office (sec 15 page 17), is it a Dispensary-urgent care (sec 15 page 23) --- ( i can explain the apartment).

I spoke with Marshal and Swift Valuation service - They have no Idea -- they said that to there knowledge I was the first one to ask.

thank you
ray
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Old 10-13-2011, 07:37 PM
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Terrel L. Shields Terrel L. Shields is offline
 
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way up high in the sky
it's a bird, it's a plane, it's a man insane
no, it's our president, LBJ...

"Medical" marijuana is a joke

It is a brick house built in 1909

Appraise it that way, and if there is any special "trade fixtures" like counters, shelving, etc. then segregate them by the cost approach, and report them as non-realty items...
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Old 10-14-2011, 09:00 AM
Lost Cause Lost Cause is online now
 
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Default Conformance?

What would be likely alternative uses? Is the neighborhood full of former houses now used for commercial purposes? Is the neighborhood still primarily residential? You note that the subject was converted to commercial use "ages ago", so I have to assume there was some other commercial use/uses prior to occupancy by the marijuana dispensary.
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Old 10-14-2011, 09:16 AM
rbrienza rbrienza is offline
 
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The area is in an older part of Denver....many of the converted houses in the area have been converted to offices (CPA, Lawyers, bail bonds etc) or retail -( boutique stores, hair salons, clothing, coffee shops). And yes it was commercial uses before. it was vacant for about 2 years prior to the marijuana dispensary moved in 18 months ago.
  #5  
Old 10-14-2011, 09:25 AM
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Terrel L. Shields Terrel L. Shields is offline
 
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In the cost approach, the construction dictates the cost, not the use. The land value dictates the H B U...
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Old 10-15-2011, 03:27 PM
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Converted-to the extent that it could not be used as a residence without 're-converting'?

Does the income generated by the rents indicate a higher value than if sold as a residence?

Does this conversion comply with existing zoning for commercial uses and use permits required for commercial use? Does the commercial use 'blend' with the surrounding buildings and uses?

If yes-sounds like retail to me, with an apartment.
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Old 10-16-2011, 10:27 AM
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Terrel L. Shields Terrel L. Shields is offline
 
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Quote:
Does the income generated by the rents indicate a higher value than if sold as a residence?
That should not matter if you are only wanting to classify the building for the Cost Approach. The modifications matter but the base building should be calculated using its design.... That is a house costs less than a medical building costs. A house used as a medical building therefore should not be valued as a medical building. The spread between the two costs is a measure of obsolescence (inadequacy) of the house as a medical unit.
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Old 10-16-2011, 10:34 AM
rbrienza rbrienza is offline
 
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All of you make great points.... And the reason I needed was for the Total Economic Life (TEL) You all have given me good insite thank you...

ray
  #9  
Old 10-16-2011, 11:24 AM
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Caligirl Caligirl is offline
 
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Quote:
Originally Posted by Terrel L. Shields View Post
That should not matter if you are only wanting to classify the building for the Cost Approach. The modifications matter but the base building should be calculated using its design.... That is a house costs less than a medical building costs. A house used as a medical building therefore should not be valued as a medical building. The spread between the two costs is a measure of obsolescence (inadequacy) of the house as a medical unit.
I did not suggest classifying it as a medical building, and it doesn't sound like one from Ray's description. Residence converted to retail is what it sounds like, to me. The 'medical marijuana' dispensaries I have seen range from someone's basement to leased storefront space but I have never seen one that is actually located in a medical building.

For cost approach I might classify it as a SFR and add in the retail-specific items which are not personal property. Hard to tell without a picture, though!

Being here in California one question I would have about the brick itself would be earthquake compliance; however use permits would have addressed this. The question to answer then is if it is Class C or D, ie., wood or masonry, and possible seismic retrofit if used for retail.

Good luck Ray.
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Old 10-17-2011, 01:16 PM
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Howard Klahr Howard Klahr is offline
 
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Hey Ray,

Keep in mind that the total economic life of an improvement converted to an alternative use is reduced, often considerably, as a result of external and functional obsolescence. The existing improvements are not likely representative of the ideal improvement which would be part of your H&BU analysis. Consequently, the land rather than the improvements would represent the greater potion of the overall value in a transitional area.

For example, any newer construction within this area would be more representative of commercial improvements rather than a SFR converted to commercial use.
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