Contributory Value for Cell Phone Towers

[Phoenix Ashwalker]

I said state regulations as well. State regulations in my state:
[State-certified residential real estate appraisers may perform appraisals on residential real estate of one to four (1–4) residential units without regard to transaction value or complexity and may perform appraisal consulting in the area of residential real estate, if, and only if, performed in compliance with all state and federal laws, rules and regulations pertaining to the appraisal assignment. This designation permits the appraisal of vacant or unimproved land that may be utilized for one- to four- (1–4) family purposes. This certification does not permit the appraisal of subdivisions or of agricultural real estate. Individual parcels of property located within a residential subdivision shall be considered residential real estate. For all other appraisals, the appraisal report shall be signed by the state-certified residential real estate appraiser and a state-certified general real estate appraiser. For the purposes of this rule, “agricultural real estate” shall be defined as improved or unimproved land with a highest and best use and primary purpose devoted to income production by crops, livestock and other products of the soil (fruit, pasture, timberland, etc).]

If you want another fun curveball related to this same report. The agricultural land is currently under a signed lease with a local farmer (very common in the area. Why not have someone else till your land and essentially pay your taxes?). However, instead of signing a 1-year lease, or even more common in the area a "gentleman's agreement" with a handshake, they signed a 3-year lease. So, unless they decide to sell the land directly to the current farmer, its essentially worthless to any other buyer. No other farm can till it for 3 years, nobody can develop it into a single, or multiple residential building sites, and it's not conducive to hunting or recreational purposes. Most reports in my rural market are relatively complicated, but this one is at the top of my list for sure, lol.

 

[Tiffany Gibbons]

Definitely not temporary or collapsible. The total lease has a potential to last 90 years if all future 16 x 5 years leases are renewed after the initial 10-year lease end, lol. Even if they only renew half of those 5 year leases, it has the potential to stick around awhile.

Then read George Hatch"s reply about being in over your head.

 

[Phoenix Ashwalker]

Then read George Hatch"s reply about being over your head.

Understood. Hence, I'm here to get feedback and opinions of how to proceed and how to best expand my knowledge related to this property.

 

[Tiffany Gibbons]

Understood. Hence, I'm here to get feedback and opinions of how to proceed and how to best expand my knowledge related to this property.

They always renew leases, the amount will usually go up on the extension. Can you do a discounted cash flow analysis with what you have?

 

[Tiffany Gibbons]

If you want another fun curveball related to this same report. The agricultural land is currently under a signed lease with a local farmer (very common in the area. Why not have someone else till your land and essentially pay your taxes?). However, instead of signing a 1-year lease, or even more common in the area a "gentleman's agreement" with a handshake, they signed a 3-year lease. So, unless they decide to sell the land directly to the current farmer, its essentially worthless to any other buyer. No other farm can till it for 3 years, nobody can develop it into a single, or multiple residential building sites, and it's not conducive to hunting or recreational purposes. Most reports in my rural market are relatively complicated, but this one is at the top of my list for sure, lol.

Not to mention, usually Greenbelt (Farm Use) is exempt from full market value. (in Tennessee anyway). Might want to get some assistance.

 

[Ricky LaFleur]

instead of signing a 1-year lease, or even more common in the area a "gentleman's agreement" with a handshake, they signed a 3-year lease. So, unless they decide to sell the land directly to the current farmer, its essentially worthless to any other buyer. No other farm can till it for 3 years, nobody can develop it into a single, or multiple residential building sites, and it's not conducive to hunting or recreational purposes.

I'm assuming you're either appraising the Fee Simple (ignoring the lease) or Leased Fee (bundle of rights have the right to occupy/use removed in exchange for cash, etc). Even under lease, assuming it's that short term and not $0, it's not worthless, just not able to be used by another owner/user for the remaining term. Farms are often enough sold under lease. How the market reacts to such leases being in place would be for the SCA to determine (I don't know your market, but I'm positively certain the reaction isn't -100%). Appraising the Leased Fee rights with the Income Approach would mean comparing contract rents to market rents and analyzing the effect on value, if any.

as well as any nonresidential, non federally related transaction for which the individual is qualified.

I'd suggest careful consideration as to whether you're qualified before completing assignments "over your head". It isn't that you shouldn't want to do more complex appraisal problems, but you need sufficient training/education to be qualified to complete them. If you're complying with USPAP, you'll also want to disclose the lack of competency prior to the assignment and what you did to obtain competency to perform the appraisal.

 

[Tiffany Gibbons]

I'm assuming you're either appraising the Fee Simple (ignoring the lease) or Leased Fee (bundle of rights have the right to occupy/use removed in exchange for cash, etc). Even under lease, assuming it's that short term and not $0, it's not worthless, just not able to be used by another owner/user for the remaining term. Farms are often enough sold under lease. How the market reacts to such leases being in place would be for the SCA to determine (I don't know your market, but I'm positively certain the reaction isn't -100%). Appraising the Leased Fee rights with the Income Approach would mean comparing contract rents to market rents and analyzing the effect on value, if any.

I'd suggest careful consideration as to whether you're qualified before completing assignments "over your head". It isn't that you shouldn't want to do more complex appraisal problems, but you need sufficient training/education to be qualified to complete them. If you're complying with USPAP, you'll also want to disclose the lack of competency prior to the assignment and what you did to obtain competency to perform the appraisal.

I'd also want to consider possibly being called to testify if someone contests the terms of the settlement of the estate.

 

[Terrel L. Shields]

The late Stephen Vertin started this thread a few years ago.

The Inwood Premise

Ok, here is something I can find little on. Who was Inwood? What was his first name? Was he an actual person or was this just a rate extraction method used by a certain institution?. I could not even find a first name in The Appraisal of Real Estate under word search. Any input would help...

appraisersforum.com

Links and Downloads | Terrel Shields, Certified General Appraiser - Mineral Appraisals, Oil and Gas Specialist

 

[George Hatch]

Look for other sales w/cell leases and which disclose the rents. Even if they're not residential properties or are otherwise not directly comparable to your subject. I can't stress this enough.

Models and formulae indicate to what the market participants *should* do, but all RE is local and what matters in an appraisal is what those market participants *actually* do. It's okay to quote studies or interview brokers and report their opinions as support but there's no substitute for seeing what these buyers and sellers actually did.

Due to the types of properties I appraise (mostly neighborhood or community oriented) I basically NEVER quote studies or stats on property types that my subject doesn't compete with, and I also almost never built cap rates or discount rates using mtg/equity buildups or bond yields or safe rates. I don't even poll the brokers because - unless it's a specialty broker - if I can't see it then neither can they. If my subject's market segment has rental investor activity then I extract their doings from those sales - after all, those rates are the most relevant to that market segment.

Just because we often have the ability to build the more complicated mousetrap doesn't mean we should use that as our default. It's good to have extra tools to turn to when you get cornered, but primary is always better than secondary. If you know what I mean.

 

[Phoenix Ashwalker]

Even under lease, assuming it's that short term and not $0, it's not worthless, just not able to be used by another owner/user for the remaining term...

Sorry, poor choice of words. I didn’t mean it was literally worthless, as in no value. Just the more general phrase. Should have know this wasn’t a good place to speak figuratively about something being worthless. Honestly, the AG land doesn’t worry me. It’s something I deal with and work around frequently in my market.