Property Valuation
In Hawaii, which type of depreciation is curable?
AA. External obsolescence caused by nearby industrial development
BB. Physical deterioration from deferred maintenance that is cost-effective to repair✓ Correct
CC. Functional obsolescence from an outdated floor plan that cannot be modified
DD. Economic obsolescence from a new highway built adjacent to the property
Explanation
Curable depreciation is economically worthwhile to fix (the cost of repair adds at least as much to value). Deferred maintenance is often curable.
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Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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