Valuation of a partially completed building

[Lost Cause]

Another Perspective

I have never done it myself, nor have I seen it done. Nonetheless, I still think it should be done. If the basis for the as-completed value is the stabilized income being capitalized, and the as-is value is then being based on the as-completed value, the lack of rent during the remaining construction period should be deducted. I have yet to hear one good reason why it should not be so. Yes, there is no building to be rented at that point. So? No rent is no rent.

Actually, you are absolutely correct on this point. The bottom line is the same however; since potential income prior to completion is zero, the deduction for rent loss between as is and as completed would be zero.

 

[Roger Murdock]

Actually, you are absolutely correct on this point. The bottom line is the same however; since potential income prior to completion is zero, the deduction for rent loss between as is and as completed would be zero.

No, it would be the rent not collected during this period, which is above zero. The actual rent collected is zero.

 

[Lost Cause]

This Is Fundamental

No, it would be the rent not collected during this period, which is above zero. The actual rent collected is zero.

You are right in that the actual rent collected is zero.
You are wrong in that the rent not collected is above zero.

 

[John Glass]

AI teaches to appraise each approach and reconciling at stabilized occupancy, deducting the costs and or expenses in the reconciliation to arrive at "as complete" and as-is" values. It is neater and cleaner than deducting within each approach. Argus is nice too because you can adjust your dates of value to get each value.

Others are correct. There is no potential gross income until occupancy is certified.

 

[Artyman1200]

What position would you rather defend in court? I would rather defend cost...