Not deducting for vacancy.

[PL1957]

You should have read the entire post .... you would have gotten more out of it.

Oh, c'mon, I thought the cocktail napkin approach line was pretty good ...

and MY point was that USPAP is silent on specific methodology.

 

[PropertyEconomics]

Oh, c'mon, I thought the cocktail napkin approach line was pretty good ...

and MY point was that USPAP is silent on specific methodology.

It is specific on not being misleading ... the issues must be addressed ... howe you handle them and how they are measured are up to you based upon your market. And if you do your work on a cocktail napkin .. make sure you have a signed certification on a cocktail napkin too ... well you can use a regular sheet of paper if you want but your report is gonna look like it was done AFTER the cocktails instead of during. Ambient lighting and all .......

 

[PL1957]

It is specific on not being misleading ... the issues must be addressed ... howe you handle them and how they are measured are up to you based upon your market. And if you do your work on a cocktail napkin .. make sure you have a signed certification on a cocktail napkin too ... well you can use a regular sheet of paper if you want but your report is gonna look like it was done AFTER the cocktails instead of during. Ambient lighting and all .......

I don't have to worry about that as long as I stamp it draft ...

 

[Farm Gal]

PLN- I LIKE the cocktail napkin approach and have been having rousing arguments with more than a few folks over limited data situations in which emulating the market requires the napkin approach cause the data you got to work with otherwise isn't worth SPIT!

Anyone but me finding that lenders are really really tightening up the purchase money end (potentially skewing income approach analysis beyond recognition?!?!:Eyecrazy

'Strong' National tenants on extended lock-tite leases *may* generate as much as a 3-5 year guaranteed note (about a max of a 15 year term) with a 25% or better equity position?!?! Even a 5-star tenant isn't getting a longer lock, just a possible 20 year term if the prospective owner is willing to sign a family members soul as additional collateral.

Lesser proposed tenancies are getting offers of even less stability?

Also noting that loans are going with both ceilings and floors for potential adjustments?!?

How are those wiser than I dealing with those issues?

 

[PL1957]

PLN- I LIKE the cocktail napkin approach and have been having rousing arguments with more than a few folks over limited data situations in which emulating the market requires the napkin approach cause the data you got to work with otherwise isn't worth SPIT!

Anyone but me finding that lenders are really really tightening up the purchase money end (potentially skewing income approach analysis beyond recognition?!?!:Eyecrazy

'Strong' National tenants on extended lock-tite leases *may* generate as much as a 3-5 year guaranteed note (about a max of a 15 year term) with a 25% or better equity position?!?! Even a 5-star tenant isn't getting a longer lock, just a possible 20 year term if the prospective owner is willing to sign a family members soul as additional collateral.

Lesser proposed tenancies are getting offers of even less stability?

Also noting that loans are going with both ceilings and floors for potential adjustments?!?

How are those wiser than I dealing with those issues?

I guess I don't understand your question - I really don't pay a lot of attention to the financing unless it's not "typical". In today's market, virtually every deal of any size requires construction of a capital stack to get the deal funded, with multiple levels of equity and debt. I'm really not sure if it impacts the underlying value of the real estate because all market participants are operating under the same constraints.

 

[PropertyEconomics]

I don't have to worry about that as long as I stamp it draft ...

NOW THAT IS SOME FUNNY STUFF .....


And now you have me curious .. what are the consequences of stamping the Comp Check .. draft?

 

[Fred]

You don't need V&C, just load the cap rate. Oh, wait a minute, wrong thread.

 

[Michigan CG]

You don't need V&C, just load the cap rate. Oh, wait a minute, wrong thread.

Wasn't that thread about property taxes?

 

[aussie ken]

Ken, I think your colleagues at Galileo, Westfield, Centro, etc. would disagree with you, especially in today's market. The credit of the tenant is key to current valuations for leased properties and making an arbitrary 1.9%+ vacancy and collection loss doesn't reflect the way the market is valuing these deals.

While accounting for eventual tenant vacancy or rollover is obviously technically correct from an appraisal standpoint, we need to recognize that most market participants don't really care to be technically correct in their analysis.

Ah yes you must be referring to the young pin striped suit types who buy and sell between themselves using figures they generate within a market they largely control and at market rental figures dependant on the whim of the guru funds managers?............Of course I could be wrong.

 

[The Warrior Monk]

Exactly. The property is sold subject to the long-term, NNN lease. Prime territory for 1031's.

The problem I see with this is (and to which I've never received a satisfactory answer) just because one particular entity with certain needs will pay that price doesn't mean that the next entity will if it is vacated. In other words, the cap rate derived is based on an investment value, not a market value.