Valuation Easy Topics Flashcards
- What are the different yields?
True Yield = Rent paid in advance
Nominal Yield = Rent paid in arrears
Equivalent Yield = Weighted yield from Term and Reversion
Initial Yield = MR on reversion, divided by current value
Running Yield = Yield at one moment in time
- What are internal and external valuations?
Internal Valuer:
- Employed to value asset of company for internal uses
External Valuer:
- No relation to the company or asset being valued
- What are yields?
- Yields:
o Measure of investment return
o YP (Years Purchase) = number of years to pay off
- What are the Amount of £1 and Present Value of £1?
- Amount of £1 = Amount of £1 in a given number of years
- Present Value of £1 = The amount of £1 at a certain time, in today’s money
- How much experience do you have with each reason of valuation?
Commonly undertake loan security valuations, however, have provided company accounts purposes and provided valuations regarding the marketability of properties
- What are the five methods of valuation?
- Comparative Method
- Investment Method
- Profits Method
- Residual Method
- Contractors Method (DRC – Depreciated Replacement Cost)
- What are the three valuation approaches?
- Income Approach – investment and profits
- Cost Approach – DRC
- Market Approach – comparable
- How do you use Kel Investment Valuer?
- Software providing valuation calculation capabilities including Term and Reversion and Hardcore methods
- Insert:
o Address
o Units
o Area
o Rent
o Term
o Reviews
o Rent-free periods
o Voids
o Yields for each income - Produces a DCF and value with yields inc: Net Initial Yield, Reversionary Yield and Equivalent Yield
- What experience have you got with AVM?
I have not had any experience with AVM, although I believe it to be computer modelling and science of valuation. Use mathematical techniques to provide an estimate of value without human intervention – yet to agree an industry wide definition
- How do you use the Hardcore Method?
- Hardcore Layer – into perpetuity
- Top Layer (Froth)
- What is hope value?
- Value arising from the future potential of a property e.g. planning permission when none currently exists or marriage value arising
- What is marriage value?
- Created by joining of two physical or tenurial interests
- Calculate before and after valuations and typically half the value
- What is a party wall?
- Shared boundary between parties
- Must inform other party if works to be done to the wall
- What is a Special Purchaser?
- Not reflective of an arm’s length transaction
- How would you do an adjustment for FRI to IR in a valuation?
- FRI generally cheaper rent
- IR generally higher rent (landlord attempt to recoup costs)
- Adjustments:
External Repairs = 7%
Insurance = 2%
Management = 3%
