INCOME APPROACH	Project No.:	FA-18 (Rev. 10/20) (1of2)
AFTER	Tract No.:
Direct Capitalization Method
Economic Rent/Mo. $	Actual Rent/Mo. $	$ Annual Rent
Structure #
Potential Gross Income (PGI) $
Less Vacancy and Collection Loss %
Effective Gross Income (EGI) $
Fixed Expenses:	%	Management
Insurance
Property Taxes
Total Fixed Expenses $
Variable Expenses:	Utilities-Electric
-Water
-Gas
-Other
Repairs & Maintenance
Other:
Other:
Total Variable Exp. $
Reserves for Replacement
Total Reserves $
Expense as a % of EGI %	Total Expenses (EXP) $
Net Operating Income (NOI) $
(Market-derived rate should be entered here)→	Capitalization Rate (Rο) %
Value Calculation (NOI / Rο) $
Excess Land and/or Other Improvements (if other improvements contribute value) $
Concluded Value $

Discounted Cash Flow (DCF) Analysis Method

This income method can be applicable when a long-term lease is in place or where the property has multiple tenants with different lease terms, etc. The analysis involves a set of income streams, a reversion (net resale price) at the end of the investment holding period, a yield rate and a terminal cap rate. Reasonable market oriented forecasting is crucial to reliable results using this methodology. Computer software developed to produce DCF (such as Argus) is expected to be utilized and all input assumptions shall be included with all printouts in the Addenda of this report.

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Subdivision (Sellout) Analysis Method

This income method can be applicable when the sellout of multiple parcels is required over time. This is also a discounted cash flow analysis and key aspects of this include an absorption rate, projecting gross income and expenses when they are expected to occur with the net sales income discounted to a present value indication for the land. All supporting data as well as the analysis itself shall be presented either in the body of the report or in the Addenda.

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