tenant and they’ve got leases their investment Land Valuations Gold Coast properties and have also been recently sold they don’t have to be physically similar and they don’t even have to be that close they have to be in the same sub market but you can go further afield so the advantage of this method is that it gives you a understanding of your sub market in terms of its investment performance that’s the yield the yield does come from the market so it uses comparable situations
to a certain extent but they don’t have to be physically comparable that gives you a lot more flexibility in terms of where your market evidence where your analysis goes for its data and likewise the rents don’t have to be quite so close either the last thing about looking at how we apply this method is to look at the question of net vs. gross analysis growth analysis where you take the asking rent and you simply divide it by the sale price or the value of the land or the comparable lands to work out the ill net analysis is where you subtract from
the grocery the total rent the rent which is mentioned in the lease you subtract from that all the operating costs that the owner has to pay before they get their net income from the property that gives you a different value for the income and what we call the net operating income we’ll look at an example now the example is taken from the residential market now generally the income approach is applied primarily to commercial properties so officers factory buildings and things like that here we’re going to be using the method in a residential situation now it turns out that residential property with the rising number of investment
bias is starting to find applications for the income approach even though traditionally for residential we use the comparable sales method because usually you don’t think of it as income producing however I’m using this example largely so that it’s something which is approachable I think all of you regardless of whether you’re working in the industry or not will be able to relate to and I would like you to go out and a little bit of a field study while you’re studying this module and basically do your own investment analysis your own income approach valuation by simply looking in the window of a local real estate agent to basically verify this and get a bit of a feel for now I’ll be talking about that shortly ok so here’s