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Is Entrepreneurial Profit Appropriate for a Collection of Fully Developed Parcels?

BigBlueGA

Thread Starter
Junior Member
Joined
Mar 13, 2002
Professional Status
Certified General Appraiser
State
Georgia
For a collection of buildings or lots that are fully developed and being valued by DCF, is inclusion of entrepreneurial profit appropriate on top of the discount rate?

Or since the most likely purchaser is an investor (because of project being fully developed -- no developer involved anymore) is the incentive to the investor reflected in the discount rate alone?

Or is this more likely a semantics question with the real answer being that profit to the investor should be reflected in a higher than typical discount rate versus other property types?
 
Last edited:

Russ Kitzberger

Member
Gold Supporting Member
Joined
Jul 3, 2007
Professional Status
Certified General Appraiser
State
Ohio
By DCF no, it is reflected in the discount rate. That is the buyer-side calculation.

Entrepreneurial profit would be appropriate on the seller side calculation as a line item on top of hard and soft costs.
 
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