Property Valuation
Contract rent below market rent creates:
AA leased fee bonus
BPositive leasehold value (the tenant benefits from below-market rent)✓ Correct
CExcess equity for the landlord
DA functional obsolescence deduction in the cost approach
Explanation
When contract rent is below market rent, the tenant has a valuable leasehold interest (they are paying less than market). The landlord's leased fee interest may be worth less than the fee simple interest because they receive below-market income.
Related Arkansas Property Valuation Questions
- Functional obsolescence in an appraisal refers to a loss of value due to:
- The cost approach to value is most reliable for:
- Which type of depreciation is caused by factors OUTSIDE the property, such as a nearby highway being constructed?
- Market value is defined as:
- The principle of substitution states that a buyer will not pay more for a property than:
- The concept of 'plottage' refers to:
- Regression is an appraisal principle that states:
- A broker price opinion (BPO) differs from an appraisal in that a BPO:
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