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How do you evaluate multi-family land value?

I have 12 unit site in Aloha, Or.   How is the land value determined?
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September 17 2012 - Portland
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Answers (2)

First, you determine the value of the project using income stream and cap rate. Next, deduct building costs, and this is where it gets a little tricky. You use depreciated costs if you want to know land value for your own purposes, but new constrction value if for other purposes (say, for a proposed acquisition of another parcel). Then, all this must be balanced with such factors as location, quality of tenant and so on. It might take an MAI appraiser, depending on what you want to do. A commercial real estate investment firm such as Bluestone and Hockley could also help. 
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September 18 2012
First let me say I'm no multi-family expert.  But the value of any real estate is best estimated from recent sales of comparable properties.  Obviously there are not dozens of recent sales of raw land in Aloha, but there may be one or two.   Then you have to adjust for the difference between your property and what sold.  Utilities on site would raise the value.  Lack of same would lower it, compared to sold properties with or without. 

Otherwise you'll have to make some pretty way out estimates.  Like what it would cost to build a 12-unit that would produce maximum rental (or sales) income to a developer, and then all the financial calculations that would (or could) result, ending with a cap rate if it's a rental, and plain profit if it's a sale, or 12 condo sales.

That's the principle you have to deal with.   As always, the devil is in the details. 
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September 17 2012
 
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