Valuation of Partial Interest
This course presents an analysis of the property valuation process where partial interest (undivided / partial interest) is involved. Depending on the situation, it can present a unique and difficult task for real estate appraisers given the numerous factors which can impact the valuation of a property under these terms.
A property inheritance where each member receives a piece of the ownership interest is an example of a situation involving the use of this principle. Understanding how to determine the value of this interest is an important skill for the appraiser, as this situation and others that require this type of work are common.
The course will open with a series of definitions needed to understand the full picture of real property ownership interests, including terms related to relationship agreements inherent in types of tenancy and partnerships available. Next a discussion of lease types will be covered, along with the types of agreement terms and methods used to calculate rent for a tenant, whether it be effective, contract, market, excess, or percentage rent.
In addition, the economic interests created by leases will be explained, in accordance to the types and terms of that particular lease. The two distinct classes will be discussed: the leased fee interest, and the leasehold interest. The best methods for valuation of a leased fee interest using the Income Capitalization Approach will be considered, along with the requirements for other capitalization methods, and examples for each.
Leasehold interest will be covered in regard to the lessee’s rights, obligations, and with a particular focus paid to how to determine the value of a leasehold interest using the popular method of Income Capitalization Approach among other methods. Examples will be provided for the cost approach, income approach, and sales comparison approach.
Additional key issues covered include:
- Life Estates
- Mortgage Interest Calculations
- Fractional Interests
Examples of Legal Precedents will be presented along with their importance in establishing new principles of fractional interest valuations.
Fulfill Your Continuing Education Requirements now. This course provides 7.5 credits of Appraisal Continuing Education.
This course, and others offered by REEDC, are designed to give our students practical knowledge that will enhance their careers as real estate appraisal professionals.
You can enroll for the Valuation of Partial Interest course by registering online below, or calling us at (718) 339-7845