Agenda - Council - 04/09/2019 - Laserfiche WebLink

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Income Approach -- continued Subject Operating Expenses Recoverable Expenses: Operating expenses that the tenant reimburses to landlord. Vacancy & Credit Loss: The landlord/owner does not recover expenses when the property is vacant. Additionally, this covers any rent concessions such as free rent for a time period. Recoverable Expenses: The estimated rental rate is based on a net basis, where the tenant pays for the following expenses; Real Estate Taxes: Typical market rates range from $2.00 to $4.00+ per SF. The actual taxes appear likely to change after a sale. The sales comparison approach value will be applied, along with a 3.5% tax rate: $685,000 x 3.50% tax rate = $24,000 rounded Insurance: Typical market rates range from $0.05 to $0.50 per SF. Actual expenses not provided, a market based estimate will be used. Repairs, Maintenance & Supplies: Typical market rates range from $1.00 to $3.00 per SF +. Actual expenses not provided, a market based estimate will be used. Management/Professional Fees: Typical market rates range from 3% to 5%+ of gross income. Actual expenses provided, management fees appear to be high. Actual expenses not provided, a market based estimate will be used. Utilities — (Water, Gas, Electric, Trash): Typical market rates range from $0.75 to $2.50 per SF. Actual expenses not provided, a market based estimate will be used. Non -Recoverable Expenses: Typically, reserves for replacement and leasing expenses are costs incurred by the owner and are not transferred to the tenant. Reserves for replacement are an allowance for, or an annual average amount needed, to make long and short-term improvements. Long-term improvements being structural, roof, windows, mechanical and parking. Setting aside for reserves reflects good management. Typical market rates range from $0.10 to $0.50 per SF. See following Income Statement for expenses for the subject.