Summary of Formulas - Edited
Summary of Formulas - Edited
Summary of Formulas - Edited
COST APPROACH
FMV = RCN (Cost per unit x FA) - Depreciation
o Simple Age Life/Overall
Building Value = RCN - Depreciation
o Modified Age Life
Building Value = RCN Curable Depreciation Depreciation
o Observed Condition-Breakdown Method
Building Value = RCN Curable Depreciation - Incurable
Reproduction/Replacement Cost New
o Residential P20,000/sqm
o Commercial P15,000 P18,000/sqm
o Industrial P10-12,000/sqm
WARNING
Copyright property of Cesar E. Santos Real Estate Academy, Inc. Reproduced with consent by TBP Skill Grades Pro. Reproduction, use or distribution of these materials without our expressed written consent is
punishable by law.
Depreciation
o Accrued Depreciation/ Past Depreciation Rate
Formula: Actual Age or Effective / Useful Life
o Future Depreciation Rate
Formula: Building Value / RCN
OR
Formula: 100% - Accrued Depreciation Rate
o Useful Life = Effective Age + Estimated Remaining Life
o Estimated Remaining Life = Useful Life Effective Age
o Effective Age = Useful Life Estimated Remaining Life
o Actual Age (history) = Effective Age
WARNING
Copyright property of Cesar E. Santos Real Estate Academy, Inc. Reproduced with consent by TBP Skill Grades Pro. Reproduction, use or distribution of these materials without our expressed written consent is
punishable by law.
WARNING
Copyright property of Cesar E. Santos Real Estate Academy, Inc. Reproduced with consent by TBP Skill Grades Pro. Reproduction, use or distribution of these materials without our expressed written consent is
punishable by law.
INCOME APPROACH
VALUE = INCOME / RATE
o FMV = NOI / OAR
o NOI = FMV x OAR
o OAR = NOI / FMV
Operating Statement
o GPI vacancy = EGI operating expenses = NOI
Overall Rate (OAR) / Capitalization Rate:
o OAR = Recapture Rate + Interest Rate
o Recapture Rate = 100% / Remaining Useful Life
o Interest Rate = Income on Interest / Value of Land &
Building OR
WARNING
Copyright property of Cesar E. Santos Real Estate Academy, Inc. Reproduced with consent by TBP Skill Grades Pro. Reproduction, use or distribution of these materials without our expressed written consent is
punishable by law.
WARNING
Copyright property of Cesar E. Santos Real Estate Academy, Inc. Reproduced with consent by TBP Skill Grades Pro. Reproduction, use or distribution of these materials without our expressed written consent is
punishable by law.