Income property appraisal math!?!

[blimp66]

I am currently attempting to complete my education requirements so that I may take the appraisal licensing exam, and have hit a semi-rough spot! I am in the midst of the book "Income Property Valuation" by Jeffrey D. Fisher and Robert S. Martin, and partially due to my nearly overwhelming fear of math, I'm having a little trouble understanding how to do some of the calculations. Other than "You should probably just hang it up kid" any suggestions would be most appreciated!!!

 

[Bryan (OK)]

Hi Blimp66,

I am a neophyte appraiser, only recently licensed. I empathize with your statements on income property math. Since I've had lots of calculus and such (yech!) due to a previous life, understanding math really wasn't a problem. Some of the allocation methods and various income approaches did confuse me at first.

My best thought is to work through a LOT of problems where you can refer to the answers when your puzzled. I bought a text "Q & A" something or other. I think it is by Tosh & Rayburn. It is currently on loan to another individual studying for the exam. Each problem is solved step by step in the back.

The good news is the first exam has minimal income approach problems of any serious complexity. If you would care to post a specific challenge your having, there are many well qualified folks to explain the concept on this forum. I can help with math issues if you need that.

My experience with the test: basic concepts dominate. GRM, GIM, IRV, NOI, etc. However, if you will take the time to work through the backbreakers, it will reinforce the basic concepts so well, you will breeze through the exam.

Good luck,

Bryan

 

[David S. Roberson]

Blimp66,

Try to find a course in Income Properties from a respected education provider in your area. This stuff can be very confusing to beginners. It really helps if you have a good instructor to show you the way.

 

[Neil (Texas)]

Once you have an understanding of the basic "super six", the rest is easy. Add, subtract, multiply, and divide.

1. Future worth of 1. (Growth at compound interest of a single deposit).

2. Future worth of 1 per period. (Growth at compound interest of a level series of periodic deposits.)

3. Sinking fund. (Amount of periodic deposit required which will grow at compund interest to a specified future amount.)

4. Present worth of 1. (Present worth of a single future income payment.)

5. Present worth of 1 per period. (Present worth of a series of future income payments.)

6. Periodic repayment. (Amount of periodic payment required to amortize a loan.)

Try to find a copy of "Mini-Math for Appraisers" by Irvin E. Johnson. published by the National Assn of Independent Fee Appraisers. It may be available on the NAIFA website (naifa.com). Simple, concise, readable, and understandable.

Another great text is "Capitalization Theory and Techniques Using the Roadmap System" by Michael L. Lange, IFAC, also published by NAIFA.

 

[blimp66]

Thanks so much for all the replys. I really appreciate all of you taking the time! I will now go put it to good use.

Cheers, Dave.