you apply that new net yield of about two percent a little bit over two percent to the net operating income which is the net rent after you’ve taken away the costs on our subject property capitalized that you end up with a net capitalized value of eight hundred
and thirty six thousand dollars there’s a little Land Valuers Gold Coast bit of difference there the differences come lively because of the different structure of the costs in the comparable properties and the subject property and that’s discussed in the study guide in this case the result is a little bit different it might be more different it might be less different what it does do it opens up the possibility for the value were to look at a bit more detail a bit more depth and hopefully get a little bit more precision
out of the result by a careful look at costs this means that the value are taking the net capitalization approach which is the preferred approach needs to be fairly competent at estimating operating costs this then leads back to a similarity between the income approach and the cost approach remember in the cost approach it was important for the valuer to be able to make reliable cost estimates however in the cost approach we’re looking at estimating construction costs or capital costs here the valuer needs to be able to estimate with sound reliability the operating costs associated with an investment if you go to Whipple and look at the example of Whipple which is a lovely example
of a commercial income approach or income capitalization approach you’ll find that that lays out the kind of cost that you’re likely to find in operating a commercial property and office building and rather than reproduce that I’d like you to read that ok so that takes us to the end of the theory and the major points here you can see that the method itself is fairly straightforward the maths in it is delightfully simple simply divide the rent divided by the yield it becomes a little bit more tricky when we start to look at