USDA 'requires' Cost Approach for CONDOS

[residentialguy]

..........

 

[Eli]

Cost for a condo...200 million?

I wouldn't charge that much. The land value as if vacant divided by the number of units in the development considering other factors such as possible density based on zoning, etc.etc. I may have done one a long, long time ago, but there were plenty of land sales when I did it. Highest and best use of land, etc, etc. Proposed new constrruction, maybe not an option, but, cost approach would be a major consideration in time to complete.

 

[Eli]

Cost approach usually sets the upper limit. But cost is not that hard with the land "as if vacant' value. The Cost approach is prolly gonna become more relative in general. It can help from over valuing something.. Land sales are a problem lately, which means the land value takes a bunch longer to estimate.

 

[residentialguy]

I wouldn't charge that much. The land value as if vacant divided by the number of units in the development considering other factors such as possible density based on zoning, etc.etc. I may have done one a long, long time ago, but there were plenty of land sales when I did it. Highest and best use of land, etc, etc. Proposed new constrruction, maybe not an option, but, cost approach would be a major consideration in time to complete.

You can't divide by the number of units in the development...cost to build is cost to build, not cost to build a part of something. The cost to build that condo is the cost to build the development. What does it cost to build that condo? Well, you need to buy the land and build that skyscraper to build that condo. :Just like you need to buy that SFR lot and build that house.

:You're giving them the cost to build divided by the number of units. That's different then cost to build.

 

[Eli]

Time is the problem that everybody wants but nobody wants to pay for. Well, they better get used to it based on supply/demand. We are not that easy anymore.

 

[hastalavista]

The Cost approach is prolly gonna become more relative in general. It can help from over valuing something.

I agree. CAN, Terrel (I believe) and a few others (maybe you) were making this point at the height of the bubble and on the way down afterward.

 

[residentialguy]

You can't divide by the number of units in the development...cost to build is cost to build, not cost to build a part of something. The cost to build that condo is the cost to build the development. What does it cost to build that condo? Well, you need to buy the land and build that skyscraper to build that condo. :Just like you need to buy that SFR lot and build that house.

:You're giving them the cost to build divided by the number of units. That's different then cost to build.

 

[Eli]

You can't divide by the number of units in the development...cost to build is cost to build, not cost to build a part of something. The cost to build that condo is the cost to build the development. What does it cost to build that condo? Well, you need to buy the land and build that skyscraper to build that condo. :Just like you need to buy that SFR lot and build that house.

:You're giving them the cost to build divided by the number of units. That's different then cost to build.

Estimated cost less depreciation equal indicated value of improvements (overall condo development) + add contributory value of remaining site improvements and add value of land based on H&B use as if vacant.

That would be overall development. Pro-rata share per sf of GLA could apply. Not great, but not bad. LOL

 

[residentialguy]

First line was good. I'd stop there. In order to build that condo, that's what you'll need. They don't sell holes for you to build.

 

[Eli]

Great in new construction. I'm sorry I didn't say that.