Customer Reviews

Income Property Valuation

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This book is used in my graduate-level Real Estate Appraisal class. I found the book to be riddled with errors and typos (for example, the bottom of page 293 shows an example property with an 8% LTV (!!)) and it is a bit dated, however, the use of a CDROM to show examples and a trial ARGUS program is nice. One major problem is that the numerous problems outlined at the end of each chapter are never answered in the book. Thus, the poor student hoping to check to see if his homework answers are correct is out of luck. The case study at the end of the book, the capstone project I assume, is an appraisal of an apartment complex. As users of ARGUS know, an apartment complex cannot be modeled well in ARGUS. The authors should have known that, and its clear that they are out of touch with how real appraisals are done. Overall, I'd say its a typical sloppy textbook written by academics with little to no knowledge of the real world....

This book is a requirement for my Basic Education - as a licensed appraiser seeking upgrade to the Certified General level - this book has been more frustrating than explanatory. The absolute absence of related examples and real-world application of income capitalization approaches is what hurts this book more than anything. For example:

Page 95, Solution 1 for computing an IRR -when computing an IRR - you have 3 of the 4 elements required but don't have the yield rate - the objective of the IRR is to compute the yield rate absent any available interest rates. In the example, the following data is provided:

Present Value (PV) = -10,000; Periodic Deposits (PMT) 12,000 for two Periods; Future Value (FV) = 10,800* (<- Notice the " * " ??) The asterisk says:

*Calculated using the present value of $1 formula on page 84.

The computation for the present value (PV) of $1 REQUIRES an interest rate...! So, in other words, there is no way to compute the FV without a rate of the for the FV (whether assumed or guessed) therefore this method does not work. So, where'd the FV come from?? What interest rate was used? Is this the future value of the reversion or is it the future value of the reversion plus the discounted cash flows? There is NO explanation. The yield capitalziation and the IRR discussion is weak and, because the book uses Chapter 4 as the basis for future chapters - it's making the going very difficult. It's as if the authors have a secret that they expect us to "find out" on our own.

I have to pass my income cap test before I can upgrade - unfortunately, I will need to purchase another book that will teach me how to compute yield rates and internal rate of returns - this book simply misses the mark.