Commercial Property Values

Property investment is known as the safest investment and profitable. Property investment is rumored to be the higher demand from day to day, property prices further up. Location is one of three important factors to invest in property. The strategic location the target of the business, as it offers a variety of convenience and completeness of the facilities. That said, the following 6 locations is quite tempting as it affects the value of a commercial property products. The demand for property assets and the rent is much higher compared to other areas. Following his presentation.

The first is close to the office area. Owning a property in this area, such as land, houses for rent, boarding house, office, and other high-value investments. Moreover, if the office is pretty elite, property prices in the surrounding automatic take effect. Demand rental property in this area will be higher.

Properties investment can also be obtained in high second location, which is close to the factory or industry. This location has its own advantages, namely population larger than other locations. It gives an opportunity for those who have properties such as rented houses or boarding houses. For commercial purposes here can also be developed, as it can serve the needs of the factory workers. The third location is in the vicinity of the school or college. Never ignore this location, especially when the school or college in large quantities. This location is very promising, because it easily generate positive cash flow at all times. In addition, commercial property will be well developed in this area.

The fourth location is around the market. The market is not always synonymous with the area dirty, damp, smelly, muddy and so on. The modern market is now being developed, and this is where the traders could become a target tenant market your property. You can develop the commercial sector or houses for rent in the vicinity of the market. The fifth location is near the shopping center. Request a rental house or boarding house around the location is fairly high, because the shopping center employees need a place to rest. With the presence of a shopping center or mall, usually the area around it becomes more alive than ever before.

Properties investment are also good in the sixth location, which is close to housing. Some housing density can be used to open a place of business. Typically, more and more homes in a residential complex, the higher the density level. Surely it requires diverse population and facility needs. It can be utilized to survey the needs of what is desired.

Based on experience from time immemorial, the value of commercial property investment is never down. At the very least, is always higher than inflation. Even during the economic crisis plagued the United States a few years ago, property values ​​rose sharply after the crisis subsides. In 2008, when inflation moves above 12 percent, the average increase in property prices is higher than the inflation rate. Compare with deposits, for example. Deposit rates are often lower than inflation. Value for money on deposit rather than increase, but instead decreased. Exactly what was said Robert T. Kiyosaki that the person who has the most deposits are actually people who are poor, because every time the value of the money deposited can be further reduced. So, are you prepared to do business in this area? Do not ever hesitate in starting a business because it will make a profit does not flow with the maximum. So make sure you really dive into the business as a whole and discipline to develop.

Assessment is an activity or process to get an estimate of value. Which was considered a treasure in the form of tangible fixed assets such as land, buildings, machinery, equipment, and intangible assets such as copyrights, patents, stamps, and trademarks.

Income Approach can be used dalammenentukan property values ​​that generate (income producing property), in everyday language is often referred to as commercial properties (Commercial Property). Commercial property values ​​are a function of income that can be generated by the property.

Relationship Between Investment Property With Assessment
Income stream generated by an income producing investment property reflects the market value of the property.
Income will be obtained property will be acquired at this time and the days to come.
Therefore, future revenues will flow to come, it means to risk
It has a yield that would result in any capital appreciation.

Methods In the Income Approach
- Gross Income Multiplier (GIM)
- Income Capitalization
- Discounted Cash Flow
- Land Residual Technique

Gross Income Multiplier (GIM)
It is a very simple method for estimating market value by the income approach. This method is analogous to the "payback period" in investment analysis "how many periods of specified gross income, until the total cost of the investment or value is recovered"

Capitalization INCOME METHOD
Property value is the annual net operating income generated by the property is converted to a certain level of capitalization
Where:
NOI = Net Annual Operating Income
i = Capitalization Rate

Net Operating Income Gross Income is reduced by operating expenses. Gross income is potential income that can be generated by the property is reduced by the possibility of a vacancy.
Capitalization Rate, which reflects the percentage of returned (rate of return) of capital investment (i = NOI / Value).
Capitalization Rate is the rate of reversal reasonable investment for investors. Level feedback reasonable investment for an investor must be able to Meng-akomodir cost of capital plus a risk premium. Besides, the investment property accounted for the yield / capital appreciation.
Thus, the Capitalization Rate can be calculated by the formula approach:
Capitalization RATE = Risk Free Rate + Risk Premium

TERMS OF USE DIRECT METHOD IN ASSESSMENT OF PROPERTY Capitalization
- Properties are considered to have income at or near the same every year
- Properties are considered to have a constant market cycle so that it can be calculated the average annual income that can represent the condition of the property income

DISCOUNTED CASH FLOW METHOD
The market value of the property is the number of "present value of the net operating income in the future" coupled with the "present value of the residual value (Terminal Value)
PV + V = SPVNOI TV

Net operating income is the income generated by the property is reduced operating costs
NOI = Revenue - OPERATING EXPENSES

Present Value is the present value of the future value
PRESENT VALUE (PV) = x Future Value Discount Factor

Discount Factor is the discount rate that makes the value will come to present value. Discount Factor is determined by two variables, namely the discount rate which reflects the rate of return on an investment and time.
1 Discount Factor = (1 + i) t

Where:
i = discount rate
t = time

Discount factor is inversely proportional to the discount rate and the length of time, the greater the discount rate then the smaller the discount factor, as well as the longer period of time then the smaller the discount factor.

Terminal value, is the estimated value of the property at the end of the projection period. There are two ways to determine the terminal value, namely (1) by estimating the market value at the end of the projection period with respect to the growth of the market value of the property itself, (2) a way to capitalize the net income for the period (n +1).

Residual LAND TECHNIQUE BASIC CONCEPTS
One method used to assess the vacant land (usually of land) that has the potential to be developed.
Used when there is no comparable market data both spacious, designation, location and other characteristics.
Basic analysis:
Planning / Master Site Development Plan
Highest and Best Use of the Site

STAGES OF ASSESSMENT METHOD "LAND residual TECHNIQUES"
1. Define the concept of development based on the master plan or the highest and best use of the site
2. Determine product development based on the concept of development
3. Determine the sales program to obtain Gross Development Value (GDV)
4. Determine the cost of development to obtain the Gross Development Cost (GDC)
5. Subtract the GDV with the GDC to acquire Residual Value of Land
6. Discounts Residual Value of Land with a certain discount rate to obtain the Property Value (Land) today.