Income Approach?

[gregb]

So why can I not take possession as of effective date?

Is the property under some other rights than fee simple?

If you loan your car to your sister for a vacation, who owns your car?

 

[Addie]

If you loan your car to your sister for a vacation, who owns your car?

You do. If as of that effective date (vacation) and agreement is in place, you severed some of your rights.

You need to tell this to someone. If you don’t. Your lying. Car has same value either way. Zero issue. But you are lying Saying you have 100% access to all the rights. You do not during this period of time.

 

[Michigan CG]

If rents are Market Rent then the Leased Fee equals the Fee Simple.

If rents are below market then the Leasehold value is positive assuming the right to sublease.

If contract rent is higher than market rent then there is a negative leasehold interest.

In that case you bought the future rights of fee simple. You never received the as of effective date fee simple bundle.

When one buys a property with a lease in place they are buying the Fee Simple interest with the right to lease the property exercised.

That opinion is bogus.

................. I don't agree with it.

Disagreeing because you think something is bogus doesn't hold much water without support. Have you consulted with your copy of The Appraisal of Real Estate published by the AI or any other respectable source?

How many owner occupants are going to be able to obtain financing, or have the willingness, to hold onto a property for 21 months before they occupy the property? IMO, I don't think the question is whether to include the income approach, it is whether to make a property rights adjustment to the SCA.

I would suggest some read the above as it is correct.

If my intent on buying the subject property is to occupy it then I may not be willing to pay "full boat" for the property as I would have to wait to use it and a property rights adjustment would be applicable. However, me who wants to occupy right away, (one buyer) does not make a market.

The easy way out would be no check box in the reconcile and explain why no box checked and manually tell the the circumstances of the value, but that's a client decision, not an appraisers. (Due to form limitations, no box appropriate, xxxx)

No, the above is not an alternative.

 

[Addie]

If rents are Market Rent then the Leased Fee equals the Fee Simple.

Preface: I regard you and Greg as very knowledgeable posters. Upper echelon.

But you just said leased fee equals fee simple.

Ok. That’s super common. Doesn’t mean they mean the same thing. Price and value match 99% of the time. Doesn’t mean they are the same.

I’m only getting at. The appraiser needs to let someone know. “Hey, I’m doing this as fee simple rights and nothing else. In reality it is under leased fee and lease hold.

 

[J Grant]

Agree.

When you buy a house in CA with a 6 month lease. When does your fee simple interest with zero overlay kick in? As in you may sleep in the actual house? (Escrow closed/prior lease in place)

In that case you bought the future rights of fee simple. You never received the as of effective date fee simple bundle.

You knowingly bought the house with a 6 month lease tenant in place, your choice. Your fee simple interest kicks in the minute you closed. Since you chose to buy a house with a tenant in place, you willingly exchanged right to occupy the house in exchange for the benefit or receiving rental income for 6 months. After tenant leaves, you are free to occupy the dwelling or might choose to rent it out again.

 

[J Grant]

Preface: I regard you and Greg as very knowledgeable posters. Upper echelon.

But you just said leased fee equals fee simple.

Ok. That’s super common. Doesn’t mean they mean the same thing. Price and value match 99% of the time. Doesn’t mean they are the same.

I’m only getting at. The appraiser needs to let someone know. “Hey, I’m doing this as fee simple rights and nothing else. In reality it is under leased fee and lease hold.

I think he meant to convey that the value of leased fee = the value of fee simple under certain conditions. The two exist simultaneously. when an owner who owns a fee simple interest house ALSO chooses to add a leased fee (rental period/lease term) to the property. A property owner has the right to rent the property any time they want ( unless they are in a co op or condo /HOA with restrictions on renting)

 

[Addie]

Your fee simple interest kicks in the minute you closed.

It does? What does fee simple mean?

 

[Addie]

Maybe it will help you all if you looked at it from a leasehold standpoint.

You appraise a property in leasehold on 08/17/18. You appraised as fee simple.

Not lying? Like zero lying?

You appraised fee simple I get. Everyone gets. Everyone wants. But what was the actual case?

Ok. @Marion Rhodes you hate me which is fine. But you gotta agree right? You’re a big rights appraiser. As of effective date. Bundle was ???? Just tell them. Done and done.

 

[Michigan CG]

Maybe it will help you all if you looked at it from a leasehold standpoint.

You appraise a property in leasehold on 08/17/18. You appraised as fee simple.

Tell us in what circumstance would you appraise the leasehold value of a property. I am going to guess there are some goofy places where that might be applicable in residential (Hawaii maybe).

 

[Michigan CG]

you willingly exchanged right to occupy the house in exchange for the benefit or receiving rental income for 6 months. After tenant leaves, you are free to occupy the dwelling or might choose to rent it out again.

The most intelligent thing I think I have ever seen you post on this forum.