MG - Valuation

Question 1

What are the 5 methods of valuation?

Answer 1

1. Comparable
2. Investment
3. Residual
4. Profits
5. Contractors (DRC)

Question 2

What is an equivalent yield?

Question 3

What is a ni yield?

Question 4

what is a reversionary yield?

Question 5

What is a gross yield

Question 6

What is the ARY?

Question 7

Which guidance note can you refer to for determining hierarchy of comparable evidence ?

Answer 7

RICS professional standard for comparable evidence in valuation

Question 8

What is the hierarcy of comparable evidence?

Question 9

What’s another lease apart from FRI and what would you have to do differently?

Question 10

How did you value the industrial unit in telford?

Answer 10

UNDERSTAND WHAT YOU DID WITH THE YIELDS!

Question 11

Was the break clause the next lease event?

Answer 11

Yes - two years from the valuation date

Question 12

At what other points in the lease can you increase to MR?

Question 13

Why did you value to the break?

Answer 13

Assume worst cvase scenaro - break was in 2 yrs team, then void periods, rent free, costs e.g. business rates - after this assume let at market rent

Question 14

When valuing the industrial unit in telford what voids and rent free periods did you assume?

Question 15

how does the length of time until the break clause affect the reversionary yield?

Question 16

What are the risks of assuming it will be let at MR?

Answer 16

Tenant may not be able to afford new rent

Question 17

was it a ll or a tenant break clause? / why does this affect your approach?

Question 18

in the redi hmo portfolio what did underaking the dd involve?

Question 19

in the resi hmo portolio what did you consider when selecting comps?

Answer 19

layout, modern kitchen spec? proximtiy to amenties,

Question 20

what operating csots did you assume in the hmo val?

Answer 20

25% - deducted these from market rent to give net rent

Question 21

what yield did you apply?

Question 22

why are yield for hmos higher than ffor single dwellings?

Answer 22

single dwellings - less turnover so less voids and lower managemnt fees

Question 23

what does YP ACTUALLY MEAN? - UNI NOTES?

Question 24

How did you complete the valuation of the resi portfolio?

Answer 24

I took the capitalised net rent by the yield into perpeuity

Question 25

Did you compare your value to vp?

Answer 25

yes looked at the MVs for the dwellings as single homes - was looking to see if there was a discount to VP (this is often around 10%) but in this case no discount as there was a strong period of rental growth

Question 26

WHAT ARE PRIME YIELDS IN BHAM

Question 27

i

Question 28

What is the hierarchy of comparable evidence?

Answer 28

1. direct market comps - e.g. completed open market transactions that are similar to your property in terms of location , situation, size
2. General market data e.g. indices or commercial databases that give trends into the market
3. other sources - interest rates, stock market movements that might give an indication