Yourself Your Lender YOUR HOUSE AS SEEN BY : Your Buyer Your - PowerPoint PPT Presentation

A PPRAISING C OMMERCIAL I NVESTMENT P ROPERTY Cydney G. Bender-Reents, MAI President Jared M. Calabrese, MAI Senior Appraiser

YOUR HOUSE AS SEEN BY : Yourself Your Lender

YOUR HOUSE AS SEEN BY : Your Buyer Your Appraiser

YOUR HOUSE AS SEEN BY : Your Tax Assessor

APPRAISERS

W HAT IS AN APPRAISER ? Anyone who provides an opinion of value State Certification – General Certified License Professionally Designated, MAI or SRA

W HO IS A N A PPRAISER ? Covers All Real 3,000 Hours GENERAL Must have a 4- Estate With No 300 Hours Experience, In CERTIFIED Year College Regard to Education No Less Than Degree Value or APPRAISER 2.5 years Complexity As of January 1, 2015

MAI R EQUIREMENTS MAI CE; 100 Hours Each 5 Years Demonstration of Knowledge 4,500 Hours Experience Over 36 Months Comprehensive Exam 13 Courses (Examinations)

E NGAGING AN A PPRAISER Client User The client and any other party as identified, by name The party or parties who or type, as user of the engage an appraiser (by appraisal consulting report by the appraiser on the employment or contract in a specific assignment) basis of communication with the client at the time of assignment

M ARKET V ALUE D EFINITION Means the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

W HEREBY : Buyer and Seller are typically motivated; Both parties are well informed or well advised, and acting in what they consider their own best interests; A reasonable time is allowed for exposure in the open market; and Payment is made in terms of cash in U.S. Dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold, unaffected by special or creative financing, or sales concessions granted by anyone associated with the sale.

V ALUES Stabilized Value • Stabilized Rent Levels • Stabilized Occupancy As-Is Value • Actual Occupancy, Rent Levels, Physical Condition Prospective Market Value • Value as of a future date • Projects that are proposed, under construction, or under conversion to a new use • Projects not yet achieved sell-out or stabilization

Stabilized As-Is

A S -I S V ALUE Stabilized Value $500,000 Less Rent Loss Vacancy 3,000 SF x $1.00/SF/Month x 3 months ($9,000) Concessions 2,000 SF x $1.00/SF/Month x 2 months ($4,000) Less Leasing Commission 3,000 SF x $1.00/SF/Month x 60 months x 5% ($9,000) Less New Roof ($30,000) Entrepreneurial Incentive @ 10% ($5,200) As-Is Value $442,800

O THER V ALUES Liquidation Insurable Value Value Value in Use

A PPRAISAL P ROCESS H IGHEST AND B EST U SE As • Legally Permissible • Physically Possible Vacant • Financially Feasible • Maximally Productive • Demolition As • Conversion • Expansion Improved • Renovation • Continued Use As-Is

C ASE S TUDY DMV Roseville

C ASE S TUDY

V ALUATION A SSUMPTIONS Extraordinary Hypothetical Assumptions Conditions Presume as fact That which is something contrary to otherwise what exists uncertain

A PPROACHES T O V ALUE Cost Income Approach Approach Sales Comparison Approach

C OST A PPROACH Land Plus Improvements Depreciated • Lack of Relevant Land Sales • Estimating Depreciation • Properties still trading below replacement values Good for Special Use Properties

I NCOME A PPROACH Power of IRV I = Income R = Rate V = Value Income Rate Value

I NCOME A PPROACH Potential Gross Income -Vacancy Effective Gross Income - Expenses Net Operating Income

V ACANCY Sources • Published Reports • Historical Rates • Surveys Rate Reflects Entire Holding Period

E XPENSES Same Expense Self Managed Structure, If Not Properties Then Adjust Atypical Maintenance Expense

I NCOME 5,000 SF x $1.00/SF/Month x 12 Months = $ 60,000 @ 10% $ 6,000 $ 54,000 @ 25.0% of EGI $ 13,500 NOI = $ 40,500

C APITALIZATION R ATES Based on 1 st Derived from Year’s Income Market Keep Consistent

IRV Value Income Rate $506,250 $40,500 8%

S ALE C OMPARISON A PPROACH Principal of Similar Highest Elements of Substitution and Best Use Comparison Size Location Access Exposure Traffic Count Age Condition Quality Parking

C OMPARABLE D ATA Obtaining and Evaluating Market • CoStar, LoopNet, MLS Comparables • The Facts Verification • The Story • Buyer & Seller Motivated Using REOs as • Acting in Own Best Interest Comparables • Open Market • Cash

C ASE S TUDY

A ERIAL SUBJECT

S TREET V IEW

B UILDING E XTERIOR

B UILDING I NTERIOR

C HEVRON 9881 G REENBACK L ANE , F OLSOM , CA

C ASE S TUDY REO Sale

REO S ALE

B ANKS , B ROKERS , AND THE A PPRAISERS Engagement Process Early Information Exchange

D IFFERENCE OF O PINIONS

R EADDRESSING AN A PPRAISAL

E NERGY R EGULATIONS AND B UILDING C ODES

T RANSIT O RIENTED D EVELOPMENT (TOD S )

P REDICTIONS Housing peak will occur in 2020 Sacramento Sports and Entertainment Complex will be completed, impact more than just hype. Sacramento Kings win a NBA Championship in 5 years Sacramento will host NBA All-Star Weekend within 8 to 10 years Sacramento will host NCAA Basketball Sweet 16 within 5 to 6 years

Q UESTIONS OR C OMMENTS ?

C ONTACT Cydney G. Bender-Reents, MAI President C.Bender@benderrosenthal.com Jared M. Calabrese, MAI Senior Appraiser J.Calabrese@benderrosenthal.com 4400 Auburn Blvd. Sacramento, CA 95841 (916) 978-4900 www.BenderRosenthal.com