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CABARRUS COUNTY 2012 APPRAISAL MANUAL <br />INCOME PROPERTY VALUATION <br />BASIC STEPS IN INCOME APPRAISING <br />In order to simplify the understanding of the basic steps of income appraising, we have briefly outlined them here <br />before taking a more in depth look at each step. <br />STEP I Estimate Gross Annual Income <br />A. Determine type of rental unit (i.e. per apt., pr s.f., etc.) <br />B. Calculate other income (i.e. parking fees, etc.) <br />C. Identify vacancy and collection loss <br />STEP II Identify Operating Expenses <br />A. Fixed Expenses (Taxes and Insurance) <br />B. Variable Expenses <br />C. Repairs and Replacements <br />D. Sources of Operating Expense Data <br />STEP III Net Operating Income <br />STEP IV Determine Income Projection Period <br />A. Remaining Economic Life <br />B. Investment Holding Period <br />STEP V Determine Discount Rate; Select Method of Rate Estimation <br />A. Band of Investment <br />B. Built -Up <br />STEP VI Identify Method of Depreciation <br />A. Straight Line <br />B. Level Annuity <br />STEP VII Identify Method of Capitalization to use <br />A. Land Residual Straight Line <br />B. Land Residual Level Annuity <br />C. Building Residual Straight Line <br />D. Building Residual Level Annuity <br />E. Property Residual Level Annuity <br />F. Equity - Ellwood <br />G. Gross Income Multiplier <br />Cabarrus County — 2012 Revaluation INCOME PROPERTY VALUATION 8- 2 <br />05/24/01 <br />Attachment number 9 <br />G -6 Page 273 <br />