Valuation L2 and L3 Flashcards
What can you tell me about about the valuation of the Industrial property in Barnsley?
- Owner-occupied – comparable method
- Warehouse with offices 80,000 sq ft
- Offices c10%
- Comps £20-40 psf
- Value £25 psf
- Market Value £2M
How did you account for the value of the offices in the industrial property?
- Measured on GIA and included in valuation as within the correct norm
What did the SWOT analysis identify for the Penistone property?
Strength - This identified that it was a large property with an open floorplan, offices element.
Weakness - Poor accessibility and location
Opportunity - Residential potential for the site
What can you tell me about the Elland Road house Market Rent valuation?
- Mid-terraced 3 bed house
- Tenanted on AST
- MR pcm of £700
- MR £8,400 p.a.
Why were you asked to provide Market Rent for the Elland Road house?
The property was being sold and at the time of the inspection was a residential investment property.
I gave my opinion of MV as an investment but also MR as the bank requested it.
- How did you search for comparables for the Elland Road house?
- Used Rightmove Plus and Zoopla
- Set 1m radius
- Similar 3-bed terraced properties
- Similar specification and standard
- Contacted agents
- Gained measurements
- What is an AST?
- Assured Shorthold Tenancy
- Most common residential lease type
- Usually 6-12 months
- Can evict without reasoning at the end of the tenancy
- How did you provide Market Value of the Elland Road house?
- Could approach it as an investment and adopt a yield to capitalise the income
- The property would most likely transact on a vacant possession basis, AST easy to ensure
- Comparable residential investments hard to find sometimes
- Circa £200k
What can you tell me about the valuation of the Owner Occupied Industrial property in Huddersfield?
- Purpose-built commercial vehicle workshop
- 25,000 sq ft GIA
- 1.5-acre surplus
- MV2 – 6 month sale period asked
- Why would the client ask for a restricted marketing period?
A bank or customer may ask for a 6 month sale period figure to represent the sensitivity of the property.
They want to determine for their own security, whether a property is going to lose money if they have to undertake a quick-fire sale.
- Why did you assume a 20% reduction?
Having attained comparable evidence, the average sale period was above 6-months.
This meant that selling the subject in 6-months would reflect less marketing, a smaller amount of interest – therefore a likely discount.
A figure in the region of 15-25% can be adopted depending on the property and the circumstances.
- What values did you apply to the Owner occupied Huddersfield industrial property?
As an owner-occupied property, I adopted a capital rate psf based on comparable evidence in the region of £100 - £125 psf.
I adopted a figure to the higher end of this range to reflect the quality and location of the property.
This gave an MV1 of £4M, MV2 of £3.2M
What can you tell me about the valuation of the Industrial Estate Investment in Hull?
- Industrial estate of 13 terraced units
- 1,250 sq ft GIA each
- Fully let on 3 year tenancies
- WAULT of 1.4-years
- Local tenants
- Value returned at £2M (9% Yield)
- How did you collect comparable evidence for the industrial estate in Hull?
- Costar, Rightmove, EGI
- Investment comparables for industrial estates in the area
- Yields 7-9% on NIY basis
- How did you produce a valuation of the Hull Industrial Estate?
- Gathered comparable evidence
- Analysed the tenancy schedule provided
- Adopted a passing rent of £150,000 p.a.
- Adopted a NIY of 9% to represent the local tenants
- This produced a value of £2M
