75A - PH - RESO 1607 N BRISTOL - Laserfiche WebLink

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INCOME APPROACH The subject property is an owner - occupied, single - family residence which has been converted and utilized as aN office building. As such, the fee simple value is analyzed using market rent and expenses. Market Rent Analysis A survey of Santa Ana and the surrounding cities for recently executed leases and asking rents for office space ranging from 500 to 10,000 square feet in size is used in the analysis. The important factors considered during selection of the comparables include location, building area, visibility and access. The search focused on properties with arterial street visibility, but data for such properties was found to be somewhat limited; however, sufficient data was available to estimate a market rental rate for the subject property. The survey properties indicate that rents are written on a triple -net, modified gross, and full service gross basis. For valuation purposes, a triple -net basis will be utilized. For triple -net leases, the tenants pay operating expenses such as property taxes, insurance, tenant utilities and janitorial, common area maintenance and utilities, building repairs and maintenance, security, parking and sometimes management (or a portion of management). These expenses are normally recouped by the landlord in the form of an expense reimbursement charge. The landlord is still responsible for non - reimbursed management (collecting the check and watching over the property) miscellaneous expenses such as those incurred between tenancy, accounting, legal, miscellaneous and replacement of short -lived items such as the roof, air - conditioning units and exterior walls, if applicable. Based on the review of the rental data and after consideration for differing property characteristics, it is concluded that a rental rate of $1.80 per square foot per month, triple -net, for the subject property is reasonable for the analysis and is used in the direct capitalization analysis. The estimated market income for the subject property is calculated in the following table: CONCLUDED MARKET RENT Building Market Rent /SF Market Annual Market Size Mo. Rent/Mo. Rent 1,214 SF $1.80 $2,185 $26,222 Vacancy and Collection Loss Small office buildings are most frequently purchased for owner - occupancy and are analyzed using the sales comparison approach, with values calculated assuming no vacancy or collection loss. However, from the perspective of an investor, a 75A -14