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CABARRUS COUNTY 2012 APPRAISAL MANUAL <br />minimal. <br />Given: NOI, $15,000 <br />Discount Rate, 9% <br />REL, 25 years <br />Estimated Reversionary Value of Land, $2,000 <br />Net Operating Income $15,000 <br />Present Worth of Income Stream: <br />NOI / (Discount Rate & Capital Recovery Rate) <br />NOI /(.09 +.0118) <br />$15,000 / .10181 = $147,333 <br />Plus Present Worth of Reversion <br />$20,000 x .115968 $2,319 <br />Present Worth of Property <br />$149,652 <br />Estimated value of Property via Property Residual Technique $149,652 <br />ELLWOOD MORTGAGE EQUITY <br />Where applicable, this technique is the superior method as it most accurately simulates investor behavior. It is <br />applicable when sufficient qualified data is available concerning the present, the future and behavior of typical <br />investors in the market. <br />In addition to discounted cash flows, reversion and required yields by investors which can be accounted for in <br />residual techniques, the Ellwood techniques takes into account leverage, appreciation or depreciation of the <br />property (based on the expectations of the investor) and the investment holding periods based on the behavior of <br />typical investors in the local market. <br />The whole analysis focuses on the development of an overall rate as a weighted average of the several claims <br />against Net Operating Income that must be met in order to make the investment competitively attractive. Either <br />Market Value or Investment Value can be estimated through the Ellwood formula, depending upon the data used <br />in the analysis. <br />In deriving an overall capitalization rate using the Ellwood Mortgage Equity Technique there are several variables <br />which must be supplied by the appraiser. They are as follows: <br />Investment Holding Period <br />Mortgage Loan Term <br />Mortgage Loan Rate <br />Loan to value Percentage <br />Equity Yield Rate <br />Plus or Minus Appreciation or Depreciation at the end of the holding period <br />Given these, the method utilizes the necessary calculations to determine the overall rate which is divided into the <br />Cabarrus County — 2012 Revaluation INCOME PROPERTY VALUATION 8- 12 <br />05/24/01 <br />Attachment number 9 <br />G -6 Page 283 <br />