Which Approach to Value an Addition to a Daycare in a Dwelling

[Terrel L. Shields]

So? Many daycares are run by churches, and businesses for their own employees.

At $900 a month per child, these folks are making some serious cash, there were at least 20 kids taking a nap when i was there. 2 assisting the kids. There is a minimum of 1 employee per 12 children in 5 and up, 1 in 6 in 2 and under. These were all school age children. The other daycares in town are Cherokee Nation and preferential to CN tribal members (about one-third the town are Cherokee.) Remember the average income in the part of the world is about $40,000 a year.

 

[J Grant]

So? Many daycares are run by churches, and businesses for their own employees.

At $900 a month per child, these folks are making some serious cash, there were at least 20 kids taking a nap when i was there. 2 assisting the kids. There is a minimum of 1 employee per 12 children in 5 and up, 1 in 6 in 2 and under. These were all school age children. The other daycares in town are Cherokee Nation and preferential to CN tribal members (about one-third the town are Cherokee.) Remember the average income in the part of the world is about $40,000 a year.

You don't get the fundamental principle behind it, which is shocking for an appraiser.

Go ahead adn limit HBU of a property to value it for a the appeal of a fraction of buyers, it is your assignment to do so.

Opening up the buyer pool would still include daycare-use buyers -

 

[Larry Phillips]

Good morning, When performing the Highest and Best Use Analysis, each component of consideration; legally permissible, physically possible, and maximally productive may limit or expand properties for consideration. In this case, it appears that financially feasible and maximally productive may zero in on operating as a daycare as potentially maximally productive. If that is your conclusion, then the income approach may be your best approach, as with many income producing properties. Deriving appropriate multipliers will probably require a bit of research for a specialty income property. RealtyRates.com may be a good resource. Best regards

 

[Terrel L. Shields]

Opening up the buyer pool would still include daycare-use buyers -

WTF would anyone want to "buy" a house then have to spend tons modifying it back to a SFR. The buyer will almost certainly continue the business. You are clueless about the motivations of non-residential buyers.

 

[J Grant]

WTF would anyone want to "buy" a house then have to spend tons modifying it back to a SFR. The buyer will almost certainly continue the business. You are clueless about the motivations of non-residential buyers.

Read my posts - I said multi use ( including commercial )or a house ora duplex - I never said the HBU was modified back to a SFR and only a SFR

Non res buyers who use it as a business still would not be appraisal value HBU as r only a fraction of business or commercial buyers- principles of supply and demand are universal

 

[Terrel L. Shields]

Non res buyers who use it as a business still would not be appraisal value HBU as r only a fraction of business or commercial buyers- principles of supply and demand are universal

That's completely nuts. You do not understand HBU "as is".

 

[George Hatch]

When it comes to non-residential property types I virtually never limit my comp search to properties with the same occupancy. Even religious use properties can sometimes end up with a different occupancy.

A few months back I appraised a property with greenhouse structures that were being used for a racing fabricator. An occupancy I completely ignored in my comp search. Some years ago it was a 12-room board and care that got purchased as a dormitory for a religious seminary located a block away. Lately it's been motels being purchased by the local govts for homeless shelters. (Group living with common kitchen/dining)

 

[J Grant]

When it comes to non-residential property types I virtually never limit my comp search to properties with the same occupancy. Even religious use properties can sometimes end up with a different occupancy.

A few months back I appraised a property with greenhouse structures that were being used for a racing fabricator. An occupancy I completely ignored in my comp search. Some years ago it was a 12-room board and care that got purchased as a dormitory for a religious seminary located a block away. Lately it's been motels being purchased by the local govts for homeless shelters. (Group living with common kitchen/dining)

That was the point I was making.

Normally, a RE agent or seller wants to expose a property to as many potential buyers as possible. Assuming zoning allows for multiple uses, then buyers of properties for those uses would consider it. Even though a structure is sold "AS IS", the buyers consider the potential and cost to convert or adapt it to a new use. If a buyer whose business is also the present occupant use, that would be a perfect fit, but limiting the HBU to that one narrow set of buyers seems counter-intuitive..

 

[Artemis Fowl]

Umm...so I voted depreciated cost.