Property Valuation
An NC appraiser who evaluates a 'going concern value' for a hotel property is valuing:
AOnly the real estate
BThe real estate together with the business enterprise value and personal property as a combined going concern✓ Correct
COnly the business enterprise without the real estate
DOnly the furniture and fixtures
Explanation
Going concern value for a hospitality property (hotel, motel) includes the real estate, furniture/fixtures/equipment, and business enterprise value (intangible value of the operating business).
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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