Appraisers' Free Forum

[Edd Gillespie]

I'm going to start a new thread.

And I am going to take my marbles and go home.

If you wish, but before you go make a significant contribution to the analysis thread. I've taken on the responsibiltiy of helping some appraisers with the concept of analysis and I haven't found a text yet that is clear about what it is or how it is done in say, market analysis fro a SFR appraisal. Jim very helpfully itemised some information that should be available for the analysis, but we stopped short of doing something with it, let alone drawing a credible conclusion from it.

[Ter Shields]

Piña colada - not to be confused with Pine coolaid...

like the ¢ or ÷?

no problemo.

(you have to be certified general to do that)

The thing about GIM's and simple Direct cap rates is that the buyers often are less sophisticated than we appraisers think we are...so they use simple multipliers. I bet 90% of small oil and gas properties are purchased on use of a multiplier between 2½ and 4 of the annual income. 3 was the norm where the old saw was for each $1 I invest, I want a return OF the dollar, a return ON the dollar and a dollar for risk...

[Pina Colada]

buyers often are less sophisticated than we appraisers think we are...so they use simple multipliers. I bet 90% of small oil and gas properties are purchased on use of a multiplier between 2½ and 4 of the annual income

Regardless of how "simple" the multipliers appear to be, clients who expect more out of an investment than a chance to play Roulette without a wheel, need to know whether it's 2.5 or 4.