Property Valuation
A Minnesota appraiser is engaged to provide an 'as-stabilized' value for a new apartment building that is currently only 30% occupied. This value represents:
AThe value at the current 30% occupancy level
BThe projected value once the property reaches stabilized occupancy (typically 93-95%)✓ Correct
CThe cost to construct the building without regard to income
DThe average of current and projected values
Explanation
An 'as-stabilized' value for a new or transitional property represents the estimated market value once the property has achieved stabilized occupancy (typically 93-95% for market-rate apartments). Lenders often use this value for construction and permanent loan underwriting.
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Key Terms to Know
Appraisal
A 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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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