REE-4103 Lecture Notes - Lecture 16: Capitalization Rate
2 Feb 2018
School
Course
Professor
Document Summary
Fundamentals of highest and best use: predicting what the market would do with the subject property, two steps, (cid:1005). De(cid:272)ide the su(cid:271)je(cid:272)t"s h&b use as though (cid:448)a(cid:272)a(cid:374)t: (cid:1006). H&b use vacant: assumes that a parcel of land is vacant or can be made vacant by demolishing any improvements, questions to be answered: H&b use legally permissible: appraiser must determine which uses are legally permissible, private restrictions, zoning, building codes, historic district controls, and environmental regulations must be investigated because they may preclude many potential uses. Irregularly shaped parcels can cost more to develop: ease of access enhances the utility of the site. H&b use maximally productive: of the financially feasible uses, the use that produces the highest residual land value consistent with the rate of return warranted by the market for that use is the h&b use. H&b use special situations: single uses.
