Valuation - 5 Methods of Value Flashcards
What are the 5 methods of value?
Comparable
Residual
Profits
Investment
DRC
How do you calculate DRC
Calculate value of land with extant consent
Calculate replacement of building using BCIS
depreciate this down due to age or economic factor
Add two values together
How do you do the investment method?
Either term and reversion for underrented
hardcore and layer for over rented
How do you do profits?
Turnover
-costs
-operators costs
-operators remuneration
= EBITDA
apply multiplier to EBITDA
How do you do residual?
Establish GDV
- Net development costs
-net off PROFIT
-Leaves residual land value
How do you do comparable?
use CoStar to find comparables and rank them on most similar. Factors to consider are:
date
specification
location
tenancy details
what is a nominal yield?
yield assuming rent is paid in arrears
what is true yield?
yield assuming rent is paid in advance
what is initial yield?
income/ over price
what is reversionary yield?
for over rented market rent/ current price
what is equivalent yield?
weighted average between reversionary and initial
what is net yield?
yield taking into account purchasers costs
what is gross yield?
yield without accounting for purchasers costs
what is running yield?
yield at a moment in time
ARY?
all risks yield encompassing all the risks of an investment
What is the structure of the redbook?
Part 1 - introduction
Part 2 Glossary
Part 3 - Professional Standards
PS1 - Compliance
PS2- Ethics
Part 4
VPS 1-5
VPS 1 TOE
VPS 2 Insepction Measurement
VPS 3 - Valuation report standards
VPS 4 - BASES of value
VPS 5 methods of value
What guidance of the redbook is related to secured lending?
VPGA 2
How would you do term and reversion?
How would you do hardcore layer?
how do you capitalise the initial yield by passing rent?
using YP single rate
