A Model to Decompose Property Rental Multipiers with Regard to the Division Between Land and Building Elements

Abstract

We propose a new model for the decomposition of rental multipliers for the property building element which also supports valuation of income-producing real properties based on the principle of stability and an un-orthodox application of discounted cash flow analysis. Having regard to the building/land element analytical split of overall property, the proposed model explicitly accounts for the impact of the value of underlying land on the decomposition of rental multipliers, and doesn’t require long-term forecasting of income.

Keywords

• market value
• valuation
• buildings
• income
• rental multiplier
• land
• taxes
• ad valorem expenditures
• discounting
• r30
• d03
• d40