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<br />06/20/2007 WED 10:02 FAX 701 293 8837 Demars and Turman <br /> <br />1aI002/012 <br /> <br />NOTES TO BOARD OF EQUALIZATION <br /> <br />City is basing the value (and adding inflation to it), on the purchase price from 2003. I, <br />obviously, overpaid for the property. The price paid 4 % years ago is irrelevant to <br />today's value. It should be compared to other similar sales. (comparables) in the current <br />market. You can see. from the City's own comparable sales they used, and the <br />comparables provided to me by Appraisal Services Inc, that the value range should be <br />between $334,800 and $347,200. (This is an average of$341,000). <br />The City's own comparables support this. <br />The purchase price has absolutely nothing to do with the value now. <br /> <br />According to my several years of real estate lending (First Federal Savings & Loan), and <br />also to Scott Mandy, a commercial appraiser from Appraisal Services Inc., the most <br />weight for valuation of rental property should be given to the income approach. <br />The City letter states a multiplier of7 times the annual income of $69,780. First, the <br />income amount given is inaccurate; the correct amount is $65.520. This "multiplier" _ <br />method does not take in to aCCOunt the vacancy factor for the market. which was 17.3 % <br />for West Fargo for 2006. It also does not take into account the expenses for the property. <br />The City's "multiplier" method is a very limited look, and should not be considered. <br /> <br />As you can see on my spreadsheet of income & expenses, the 2006 net operating income <br />was $20,831. Mr. Mandy of Appraisal Services Inc. told me the current CAP rate to use <br />for this area, is now 8.25 %. This would put the value. according to the income approach. <br />at $252,496. <br /> <br />This property should be valued at the average of the income approach value ($252,496), <br />and the comparable approach value.($341,000). <br />The average of these 2 approaches is $296,748. <br /> <br />The value ofthe extra garages on my property. which the City has at $34.000, should be <br />added to this average of $296.748, making the total fair value of my property $330,748. <br /> <br />~ O~ <br />Ron Odegaard <br />6~18-2007 <br />