Some Math and Computer tools that are useful in Land Appraisal

There are some basic kinds of calculations that can be seen often in appraisals:

• The IVR formula - Income, Value, Rate. See illustration. In a nutshell:

• To find Income ("I") you multiply value by rate. So if you have a property worth $1 Mil and the going return on investment for similar properties is 8%, you should be receiving an annual net income of $80,000.
• To find Value ("V") you divide Income by Rate. See the example of Capitalization below.
• To find your Rate of Return you divide Income by Value. So if you're getting $80,000 annually on a $1 Mil property your rate of return is 8%.
• Capitalization of future cash flows - examples:
• say in 5 years a תכנית will come into effect that will increase the current property by 10 million dollars. It's necessary to discount what the value of $10 million in 5 years is worth today. assuming a cap rate of 8% the equation would be $10 mil/(1.08^5).
• say you're appraising an industrial or commercial property that has an average yearly net income cash flow of $100K. You need to capitalize that for a present value by dividing the income by your capitalization rate to give you the Value.
• Averages and Weighted Averages - sometimes multiple value sources will give competing values and you have a preference towards one over the other, in which case you make use of weighted averages.

In addition here's a compilation of some nifty computer tools that are very useful.

• Microsoft Excel:
• It goes without saying the basic use of operators and basic functions are important (SUM, AVERAGE, ROUND, etc.
• I've found also that the functions LOOKUP and VLOOKUP can be helpful as well
• PIVOT TABLES - are A-M-A-Z-I-N-G for doing any analysis of large swaths of data. Literally dozens of applications.
• Elasticity or Sensitivity Tables ניתוח רגישות - After having decided say on $5,000/SqMtr for your appraisal calculation, you may want to see how the final value sways and changes were you to have chosen 5,100 or 4.900 etc. I don't really know what buttons you push on an English excel, but in the hebrew excel it's under the ניתוח מה אם button which is under נתונים.
• Adobe PDF:
• Measuring area or distance - I only just recently discovered this. if you're viewing a PDF format of building plans and you want to know a particular area you can do so with the PDF. I don't have time to give the step by step now - look for it in youtube. essentially though you first set the scale according to the document you're viewing, often for me it's 1:250 cm or 1:2.50 meters, and then you can sketch the area you want and adobe will automatically tell you the area.
• Misc
• the SNIPPING TOOL in Microsoft Windows is indispensable for me as a land appraiser. allows me to show snapshots of what i'm looking at.