Investment Method

 

The 'Investment Method' is used for trading properties where evidence of rates is slight, such as hotels, cinema, car park and etc.

In normal circumstances, a three-year average of operating income (derived from the profit and loss or income statement) is capitalized using an appropriate yield. Note that since the variables used are inherent to the property and are not market-derived, therefore unless appropriate adjustments are made, the resulting value will be Value-in-Use or Investment Value, not Market Value.

Although it is complex, this method is essential to any property valuation, especially for buy-to-operate investments. It is frequently employed by financial and investment professionals when valuing assets.

 
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