Inferior Lease Position [2920]

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The subject property is leased on a net basis for $30,000 per year for 20 years.  Market rent is $35,000.  All comparable sales are rented at market.

 

If the appropriate discount rate is 10% and the expected value at the end of the lease is $40,000, what negative adjustment would be required to account for the inferior lease position?

 

Column

Rate

Years

Amount

Factor

Value

5

10.0%

15

$5,000

7.606080

$38,030


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