BPO and Income Approach
Any BPO, strategic management plan should consider the income approach when the real estate is a new property, apartment building, real estate listing, commercial property, business or some other property that deviates from the comparison approach.
The other approach such as the income approach of analyzing real estate focuses upon revenue or income a property generates. The four components of this approach is to evaluate the following:
The bpo should estimate the fair market rent. This is rent that can be made on the open market. Contract rent is what tenants are actually paying.
The bpo should also analyze the operating expense. These are all expenses excluding debt service and depreciation.
Analyze the rate of capitalization. This an interest rate which is what is paid to the lender for the use of their money. This is a return that is a percentage that is earned on an investment. There are two capitalization methods. They are Direct Capitalization and Yield Capitalization.
Direct Capitalization is an opinion of value based upon a properties single year income. However Yield Capitalization is an estimate that is based upon a series of annual incomes over a specified period of time.
The three variables of real estate investment are income, rate of return and value. In other words the Income Approach is Income/Rate=Value. Income is the amount of money that comes from a property. Rate of return is what investor calculate the return on an investment. Value is what someone is willing to pay for real estate.
All projections must be based upon evidence. `This evidence is such as examining income,, expenses and other items.
Please find the following Asset Management Companies:
Titanium Solutions http://www.titaniuminc.com/
US Real Estate Services http//www.usres.com --uses RES.net--
USA Valuation Services http://www.usavaluationservices.com
UTLS Default https://utls.mindbrix.com/index.html
Valu America https://orders.valuamerica.com/vaxsp/register/vendor/legal.aspx
Valuation Support Services https://www.vss20.com/Pages/Broker/NewBrokerProfile.aspx
Wolverine Real Estate Services http://www.fieldinspection.com