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►_I aWATya,•111:1011IV, <br />INCOME APPROACH <br />The subject property is an owner -occupied, commercial building utilized as an <br />optometrist's office. As such, the fee simple value is analyzed using market rent and <br />expenses. <br />Market Rent Analysis <br />A survey of Santa Ana and the surrounding cities for recently executed leases and <br />asking rents for office space ranging from 656 to 3,279 square feet in size is used in the <br />analysis. The important factors considered during selection of the comparables include <br />location, building area, visibility and access. The search focused on properties with arterial <br />street visibility, but data for such properties was found to be somewhat limited; however, <br />sufficient data was available to estimate a market rental rate for the subject property. <br />The survey properties indicate that rents are written on a triple -net, modified gross, <br />and full service gross basis. For valuation purposes, a triple -net basis will be utilized. <br />For triple -net leases, the tenants pay operating expenses such as property taxes, <br />insurance, tenant utilities and janitorial, common area maintenance and utilities, building <br />repairs and maintenance, security, parking and sometimes management (or a portion of <br />management). These expenses are normally recouped by the landlord in the form of an <br />expense reimbursement charge. The landlord is still responsible for non -reimbursed <br />management (collecting the check and watching over the property) miscellaneous <br />expenses such as those incurred between tenancy, accounting, legal, miscellaneous and <br />replacement of short-lived items such as the roof, air-conditioning units and exterior walls, <br />if applicable. <br />Based on the review of the rental data and after consideration for differing property <br />characteristics, it is concluded that a rental rate of $1.80 per square foot per month, triple - <br />net, for the subject property is reasonable for the analysis and is used in the direct <br />capitalization analysis. <br />table: <br />The estimated market income for the subject property is calculated in the following <br />CONCLUDED MARKET RENT <br />Building Market Rent/SF Market Rent/Mo. Annual Market <br />Size Mo. Rent <br />1,545 SF $1.80 $2,781 $33,372 <br />75E-14 <br />