PROPERTY IDENTIFICATION INSTRUCTOR: CHERYL B. BELLA, MAI SPONSOR: THE GREATER BATON ROUGE ASSOCIATION OF REALTORS

Transcription

1 PROPERTY IDENTIFICATION INSTRUCTOR: CHERYL B. BELLA, MAI SPONSOR: THE GREATER BATON ROUGE ASSOCIATION OF REALTORS

2 PROPERTY IDENTIFICATION 5 Hour Indoctrination Course A) Classification of Property Type Vacant Site Single Family Residential Multi-family (>4 units) Office (Professional/medical; single/multi-tenant) Retail (single/multi-tenant) Industrial (single/multi-tenant) Special Purpose B) Property Location Neighborhood boundaries Neighborhood life cycle Immediate location visibility, access C) Legal Description Rectangular Survey System (section/township/range) Metes and Bounds System (parcel boundaries) Lot, Subdivision, Parish, State D) Site Details Size acreage vs. SF Shape Usable vs. excess/surplus Exposure Topography Flood Zoning Use Zoning Utilities Easements/Encroachments Other Restrictions E) Improvement Details Identifying quality, age (actual vs. effective ) and condition of improvements Computing the area of a property - based upon the property type; emphasis on understanding the appropriate unit area for the given property type (BOMA standards) - Hands-on Class Example F) Ownership Interest Fee Simple vs. Leased Fee vs. Leasehold G) Market Value Regulatory definition Value vs. Price H) Test overview of class Property Identification / Instructor: Cheryl B. Bella, MAI 2

3 CLASSIFICATION OF PROPERTY TYPE: Vacant Site Multi-family (>4 units) Office (Professional/medical; single/multi-tenant) Retail (single/multi-tenant) Industrial (single/multi-tenant) Special Purpose * * Special Purpose Property Limited market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built. LOCATION, LOCATION, LOCATION Subject s General Neighborhood Set Neighborhood Boundaries area which includes complementary uses. (Often defined by physical features such as thoroughfares, waterways or by occupant or development characteristics.) Neighborhood Life Cycle Growth Stability Decline Revitalization Subject s Immediate Location Access major thoroughfare/subdivision street, interstate visibility and convenience, etc. GOAL Define best area to search for comparable data and general market trends. Property Identification / Instructor: Cheryl B. Bella, MAI 3

4 LEGAL DESCRIPTIONS Purpose adequately identify the location of the land on the ground to the exclusion of all other land, or furnish some means by which such location can be obtained from other sources. Surveyor person who surveys or measures land BLM Bureau of Land Management oversees substantially all official surveys for the federal government Three Primary Systems in Louisiana 1. United States Public Land Survey System (USPLSS), a.k.a. rectangular or quadrangular survey system. This system is a grid classification system that is unique to North America (US and Canada). It identifies a property to the exclusion of other land by stating the section, township and range numbers in relation to a specific Principal Meridian. Townships are numbered north or south of the base line. Ranges, or a "column" of townships are numbered east or west of the principal meridian. This system was implemented to locate and describe the first sales of public lands in the U.S. and substantially all federal disposals of the public domain since Linear Measurement 1 mile = 80 chains = 320 rods 1 chain = 4 rods = 66 feet = 100 links 1 rod = 5 ½ yards = 16 ½ feet = 25 links 1 link =.66 feet = 7 7/8 inches Property Identification / Instructor: Cheryl B. Bella, MAI 4

5 Range (East/West) Township (north/south) Square Measures 1 Township = 36 square miles, or 36 sections 1 Square Mile = 640 acres 1 acre = 43,560 square feet 1 square rod = square yards = square feet Property Identification / Instructor: Cheryl B. Bella, MAI 5

6 o Each section may be subdivided into smaller parcels. For example, a ten acre parcel could be described as: SE 1/4 SE 1/4 SE 1/4 of Section 5, T7S, R2E, GLD, East Baton Rouge Parish, LA Translated: the southeast quarter of the southeast quarter of the southeast quarter of section 5, Township 7 South, Range 2 East, Greensburg Land District, East Baton Rouge Parish, LA. With such a description, the 640 acre section is quartered to locate a 10 acre tract. Each quadrant of section (NE, NW, SW, SE) can be subdivided in this method. In Louisiana, parcels of land known as arpent sections or French arpent land grants also pre-date the PLSS, but are treated as PLSS sections. An arpent is a French measurement of approximately 192 feet, and a square arpent (also referred to as an arpent) is about 0.84 acres. French arpent land divisions are long narrow parcels of land usually found along the navigable streams of southern Louisiana, and also found along major waterways in other areas. This system of land subdivision was begun by French settlers in the 1700s, according to typical French practice at the time and was continued by both the Spanish and by the American government after the acquisition of the Louisiana Purchase. A typical French arpent land division is 2 to 4 arpents wide along the river by 40 to 60 Property Identification / Instructor: Cheryl B. Bella, MAI 6

7 arpents deep, while the Spanish arpent land divisions tend to be 6 to 8 arpents wide by 40 arpents deep. This method of land division provided each landowner with river frontage as well as land suitable for cultivation and habitation. These areas are given numbers just like standard sections, although the section numbers frequently exceed the normal upper limit of Descriptions referring to recorded subdivision. For example: Lot 435, Broadmoor Place Subdivision, 11 th Filing, East Baton Rouge Parish, State of Louisiana. Once a plat is recorded in the parish records, the description is typically considered sufficient. Often the original and bundle number of the plat is referenced. 3. Descriptions described by Metes and Bounds. This is a system that defines parcel boundaries. Metes means measures of length and bounds are the boundaries. This system is used throughout the world to define property boundaries. In Louisiana it is typically used when a property is not located in a subdivision, particularly to define irregularly shaped parcels. The description begins at a known boundary (possibly a physical feature), takes you to the point of beginning and then defines the bearing (direction of the line angle) and distance of each boundary until the site closes. Property Identification / Instructor: Cheryl B. Bella, MAI 7

8 Directions are always described in degrees from the cardinal directions of North or South; never from the cardinal directions of East or West. SITE DETAILS Site Size determine appropriate reporting unit - SF, Acre Note: 1 acre = 43,560 square feet Site Shape Dimensions (subdivision plat, site survey) Usable vs. excess/surplus Topography Topographical maps Floodplain and Wetlands Analysis FEMA (Federal Emergency Management Agency) publishes flood plain maps. Fema Maps - Baton Rouge Parish Flood Maps Floodplain surfaces along the courses of rivers, streams and other bodies of water that are subject to overflow and flooding Property Identification / Instructor: Cheryl B. Bella, MAI 8

9 Firm Flood Zones Zone A Areas of 100-year flood; base flood elevations and flood hazard factors not determined Zone AE Areas of 100-year flood; base flood elevations and flood hazard factors determined. Zone X Areas between limits of the 100-year flood and 500 year flood; or certain areas subject to 100-year flooding with average depths less than one (1) foot Zone X Areas of minimal flooding (no shading) Wetland areas that are frequently inundated or saturated by surface or ground water and support vegetation for such soil conditions. Wetlands are defined by Section 404 of the Clean Water Act Other Environmental Issues Man-made issues contaminated sites Environmental Site Assessments Property Identification / Instructor: Cheryl B. Bella, MAI 9

10 Use Zoning Chapter 8 of the Uniform Development Code for East Baton Rouge Parish establishes zoning districts. Chapter 8 East Baton Rouge Parish Code of Ordinances, Unified Development Code District Designation A H B N GO C LC HC CW M R RE/A GU X PUD SPUD UDD District Description Residential Historic Transition Neighborhood General Office Commercial Light Commercial Heavy Commercial Commercial Warehousing Industrial Rural Residential Estate/Agriculture Government Use Adult Businesses Planned Unit Development Small Planned Unit Development Urban Design Property Identification / Instructor: Cheryl B. Bella, MAI 10

11 For copy of unified development code Web site Rezoning Requests - Complete A-1 Application (Request for Rezoning) and an Adjacent Property Owner s form. Web site for applications Horizon Plan 20-year Comprehensive Land Use and Development Plan for the City of Baton Rouge and the Parish of East Baton Rouge. Blueprint for the future serves as a guide for those making land use and development decisions within the City Parish. Adopted by Metro Council 1/7/92 Periodic Review every five years Horizon Plan includes 7 elements 1. Land Use 2. Transportation 3. Wastewater, Solid Waste and Drainage 4. Conservation and Environmental Resources 5. Recreation and Open Space 6. Housing 7. Public Services, Public Buildings and Health and Human Services Web site Utilities Easements/Encroachments Other restrictions Property Identification / Instructor: Cheryl B. Bella, MAI 11

12 IMPROVEMENT DETAILS Age of Improvements Construction Components (foundation, walls, roof, interior finishes, HVAC, etc.) Condition Size of the Improvements COMPUTATION OF AREA FOR VARIOUS PROPERTY TYPES Office Standard classifications are defined by BOMA (Building Owners and Managers Association) and approved by ANSI (American National Standards Institute). Commercial standards developed in BOMA web site is Area Definition Use Gross Building Area (GBA)/Construction Area Gross Measured Area Rentable Area Usable Area Office Area Common Area The total floor area of a building measured from the outside finished surface of the permanent outer building walls. It is the sum of all enclosed floors of the building, including basement floors, garages, mechanical equipment floors, and penthouse floors. The building enclosed by dominant portion excludes parking garages and areas outside of building line Measured to the inside finished surface of the dominant portion of the permanent outside wall (Gross Measured Area), less major vertical penetrations*. The finished surface of outside of corridor wall, to the mid-section of adjoining walls, and inside finish surface of the dominant portion of permanent outside wall. Individual unit usable area (inside surface of walls shared with common area) Usable area, excluding office areas of each tenant (includes walls shared with office area). Comparing single tenant building (sales/leases), determining construction costs of total structures. Defined in multi-tenant buildings, but not used for leasing purposes. Use to measure rentable area per floor and building Used to measure space tenant actually occupies and to allocate common area Individual tenant space Area that provides common services to building tenants Property Identification / Instructor: Cheryl B. Bella, MAI 12

13 *Vertical penetrations stairs, elevator shafts, etc. Efficiency Ratio = Rentable Area/Gross Building Area Add-On (Load) Factor = (Rentable Area Usable Area)/Usable Area Floor Rentable/Usable Area = Floor R/U Ratio (extracted from total and applied to each office area as a method of determining Basic Rentable Area. Both the Add-On Factor and Floor R/U Ratio serve the same purpose if appropriately computed and applied to the individual office area. They provide for a computation of the unit s percentage of common area. Property Identification / Instructor: Cheryl B. Bella, MAI 13

14 EXAMPLE Rentable Area Gross Building Area Usable Area Unit A Suite Size Lease Rate 4,500 SF 4,950 SF 3,800 SF 1,600 SF $16/SF of Basic Rentable Area Task Compute Efficiency Ratio (rentable/gross building area): Compute Add-On (Load) Factor (rentable usable)/usable: Compute R/U Ratio (rentable/usable): Utilizing the Load Factor or R/U Ratio, Compute Basic Rentable Area of Unit A: Compute Lease Rate for Unit A: Property Identification / Instructor: Cheryl B. Bella, MAI 14

15 Retail Area Gross Leasable Area Definition Measured from outside walls to center of joint partition walls Apartments Area Gross Building Area Unit Size Definition Measured from outside Measured from exterior wall to mid-section of adjoining walls Condominiums Interior measurement sheetrock to sheetrock. Residential No nationwide standard for measuring houses until New standard approved by ANSI. Area Gross Living Area (GLA) Definition The finished, heated and cooled, and habitable above grade area of a house measured from the exterior walls. In order to an area to quality as living area. It must be accessible from the interior of the house. (GBRAR definition) ANSI has included a required ceiling height of 7 feet, except under stairs where there is not specified height requirement or where ceiling is sloped. If sloped, ½ of finished square footage must have a vertical ceiling height of at least 7 feet. No portion may be included less than 5 feet. Steps in Computing Living Area: 1) Measure Structure from exterior 2) Convert interior dimensions (when exterior dimensions could not be obtained) to exterior dimensions by adjusting for perimeter thickness. 3) Square the structure 4) Divide structure into geometric figures 5) Calculate the Area of each figure 6) Total the calculated areas Property Identification / Instructor: Cheryl B. Bella, MAI 15

16 Break down Value/Price into appropriate unit of comparison Examples of Appropriate Unit Indicators Nursing Home Restaurant Retail Residential Parking Garage Trailer Park Apartment Example small apartment complex compared on two unit indicators SP/Unit; SP/SF of NRA Sale Age Complex Name Sales Price 1 year old Apartment A $486,000 6 months Apartment B $340,000 4 months Apartment C $199,000 1 month Apartment D $257,520 Indicated Value Range $199,000 - $489,924 Mean - $320,630 Property Identification / Instructor: Cheryl B. Bella, MAI 16

17 Sale Date Complex Name # of units Rental Area (SF) Mean Unit Size SP/SF SP/Unit 1 year Apartment A $37.97 $22,091 6 months Apartment B $48.96 $24,286 4 months Apartment C $28.66 $24,875 1 month Apartment G $46.40 $28,611 Subject 11 8, Mean: 641 $40.50 $24,966 Sales Price/SF Unit Indicator Range Low-High % SP/SF Mean Change $ $ % $40.50 Weakness - does not differentiate for varying unit sizes or units per complex. Sales Price/Unit Indicator Range Low-High % SP/Unit Change Mean $22,091 - $28, % $24,966 At $25,000/unit X 11 units = $275,000 Note: At $40/SF X 8955 = $360,000 (computes to $32,727/unit above range) HANDS ON EXAMPLE Measure Office Building It is imperative that you measure the property. Get plans if can, but always measure. Tools to measure tape measure (wheel) 10 X 10 graph paper Property Identification / Instructor: Cheryl B. Bella, MAI 17

18 IDENTIFY OWNERSHIP INTEREST Physical identification is complete now must identify the ownership interest in the property! Ownership Interest Definitions: Fee Simple (owner maintains the entire bundle of rights) Absolute ownership unencumbered by any other interest or estate; subject only to the limitation of eminent domain, escheat, police power, and taxation. *Fee simple is the interest typically transferred in residential transactions owner s 100% interest in the property. You typically transfer the right to own and occupy the structure. Leased Fee - (landlord s interest) an estate where ownership interest is held by a landlord with the right of use and occupancy conveyed by lease to others; the rights of the lessor (the leased fee owner) and the lessee (leaseholder) are specified by contract terms contained within the lease. Leasehold (a tenant s interest) - the right to use and occupy real estate for a stated term and under certain conditions; conveyed by a lease. Market Value of + Market Value of = Market Value of Leased Fee Interest Leasehold Interest Fee Simple Interest Thus, if the leased fee interest is positive (contract rent is greater than market rent), the value to the leasehold is negative because tenant is paying too much! The value to the leasehold is positive when a tenant is renting at a below market rate. Definition required by financial institutions! MARKET VALUE DEFINITION Property Identification / Instructor: Cheryl B. Bella, MAI 18