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Loading the Cap Rate

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jb2010

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Apr 29, 2008
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State
Illinois
When is it appropriate to "load" the cap rate when doing an income analysis?:shrug:
 

john snyder

Senior Member
Joined
Jul 27, 2002
Professional Status
Certified General Appraiser
State
Michigan
By loading the rate are you referring to an ad valorem problem?

jbs
 

jb2010

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Illinois
Just want to compute the value of an income producing office building. There's only one tenant and the tenant pays the property tax (along with all the other operating expenses).
 

Dennis J. Black ASA IFAS

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Mar 5, 2002
Professional Status
Certified General Appraiser
State
Florida
If you want to determine the value why not hire an appraiser? You see we have specialized training. Think of it this way. You have teeth. You brush your teeth and inspect them on a regular basis. You know about your teeth, but that does not make you a dentist.
 

Michigan CG

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State
Michigan
When tenants pay all expenses it is common for them to also pay the property taxes.
 

PropertyEconomics

Elite Member
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Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Im still scratching my head at "loading" a cap rate. The poster really hasnt described what it is they are asking ... impossible to answer.
 

Michigan CG

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Certified General Appraiser
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Michigan
I think he wants to lower/raise the cap rate depending on who pays property taxes.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I don't understand what you mean by "loading" the cap rate. Leases can be net, gross, or modified gross... and you have to verify your rent comps to make adjustments. Once you make proper adjustments to the rent comps, and know a market rent, you can develop a "real" cap rate without playing funny money games.
 

jb2010

Freshman Member
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Apr 29, 2008
Professional Status
General Public
State
Illinois
Timothy Evans has it right. That's what I'm asking.
 

Dennis J. Black ASA IFAS

Senior Member
Joined
Mar 5, 2002
Professional Status
Certified General Appraiser
State
Florida
Well if that is what you are asking here is the answer. NEVER. Who pays the taxes effects NOI, not the rate.

Maybe we can be more helpful if you tell us why you are asking. Are you a finance student? Are you considering buying an investment property? The more we know, the more guidance we can provide.
 
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