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October 17, 2011 (Regular Meeting) Page 754 ANNUAL GROSS INCOME MULTIPLIER APPLICATION Typical comparable sale price $150,000 Typical comparable gross annual income $2,400 Gross Income Multiplier (GIM) 62.5 Subject parcel gross annual income $2,700 Estimated Value $168,750 Care must be exercised in the use of gross income multiplier. This method is only applicable where there is a high degree of comparability of properties sold in the market to the property being appraised. There must also be a sufficient number of qualified sales of comparable properties since a sound multiplier cannot be determined from only one or two sales. OVERALL RATE This is the most applicable method to use in Revaluation Projects. The Overall Rate is the ratio of NOI to present worth of the property. Overall rates are expressed as an annual percentage rate and are most effective when derived directly from market sales. GIVEN -Gross Annual Income Vacancy /Rent Loss Expenses OVERALL RATE FROM MARKET Gross Annual Income Less Vacancy /Rent Loss Less Expenses Net Annual Income Divided by Overall Rate $30,000 5 ° 0 300 100 $30,000 - $1,500 - $8,550 $19,950 .10 Total Present Value $199,500 INCOME APPLICATION TABLE APPLICATION DESCRIPTION CODE REQUIRED DATA #1 Land Residual LRST 1- Net Annual Income Straight Line 2- Current B1dg.Value 3- Remaining Economic Life #2 #3 #4 #5 #6 #7 Land Residual Present Value or Discounted Cash Flow Building Residual, Straight -line Building Residual Present Value Property Residual with land reversion at the end of period Ellwood Mortgage Equity Annual Gross Income Multiplier LRLA BRST BRLA PRLA EQTY AGIM 1- 2- 3- 4- 1- 2- 3- 4- 1- 2- 3- 4- 1- 2- 3- 4- 5- 1- 2- 3- 4- 5- 6- 7- 1- 2- OVERALL RATES (OAR) 2012 REVALUATION Net Annual Income Current Bldg. Value Remaining Economic Life Discount Rate Net Annual Income Current Land Value Remaining Economic Life Discount Rate Net Annual Income Current Land Value Remaining Economic Life Discount Rate Net Annual Income Current Land Value Expected Land Grow Rate Discount Rate Remaining Economic Life Net Annual Income Investment Period Mortgage Term Annual Mortgage Rate Loan to Total Ratio Desired Yield Expected Appreciation ( +) or Depreciation ( -). Gross Annual Income Annual Gross Income Multiplier APPLICABILITY Short -term lease & rental properties. New or nearly new buildings. (Known building value.) Long -term lease & new or nearly new buildings. (Known building value.) Short -term lease & rental properties. (Known land value.) Long -term lease & good land comparables. (Known land value.) Long -term lease, overall rate obtained from comparable sales. Sophisticated, short -term (5 -10 yr.), investors, recent refinancing and current dependable growth forecast. Sufficient sales with a high degree of comparability to establish a reliable Annual Gross Income Multiplier The following chart contains typical overall rates and expense ratios for use in performing standardized income appraisals. The expense ratio ranges are for use on properties where the gross lease is the most likely lease arrangement, when net, double net or triple net leases are in order the expense ratio will need to be adjusted. These expense ratios include