Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-02

II,
$4,000 real estate appraisals running
into billions OF dollars In the last quar-
ter century, declared that the Bank OF
England system of appraiSing the Value
of income producing properties mao
built up a regard for realty investments
In Great Britain that has been enjoyed
for generations.
Scores "GuesSograph" System.
The speaker scored real estate Valu-
ations based on the "guessograph" and
said that fortunes can be made in COM
1nercial properties built and operated
to produce steady, lasting, dependable
income.
In predicting for the future greater
nlblic confidence with the more uniVer-
sal EMPLOYMENT of more Scientiflc ana
conservative appraisal methods, the vet
eran appraiser said according to IN
formation received from the Mortgage
Bankers Association:
Universities and schools OF COM
merce throughout the country are CIV
ing courses in the Bank Of England
system. and this shortly will put out
Of business the horse-trading real estate
brokers or the peddler OF minated Sc
curitieS.
mo counting of bricks can laugh of
the vital essential of earnings. Don't
let any one tell you that earnings are
impossible of accurate forecast. IN
come types. of course, vary as 10 ae-
sirability: some are more dependaoly
calculatable than others. Many factors
enter into the equation-size ana
strength of the city, choice of location,
class of property and, finally, almost
euualing everything else in Importance
The MANAGEMENT ability OF the instltu.
ton to which is intrusted the financial
happiness of the property owner.
Appraisals Should Be Proven.
Gan anpraisal that cannot be under
stood and proven is not an appraisal.
Anything less, in most instances; war
rants SUSPICION on the part of the In
vestor either in real estate itself or IN
the bonds for which 1t is sometimes
made the unjustified excuse"
Sound appraising must take into CON-
alteration the highest and best use OF
income property in order to develop
maximum ground value and must also
consider conservative financing ano
amortization than can be met with Ger
tairty, said Mr.. Nolan:
The speaker admitted, however ulaI'
IN snite of his formula, appralslng can
never be reduced to Robot" operation
die to the importance OF ipdlvloual
judgment, but such Judgment, based on
scientific research. differs from Cne
nninions that we're often accidents wnen
they were right in the past, he SAID.
Here is Mr.. Nolan's plan:
Determine maximum rent producer
?. Estimate cost of improvement.
8. Rent value space and scheoule.
4. Work out operating budget, nxeo
charges and vacany allowance.
S. Set up sinking fund requirement
amortizing natural dissipation OF IN
Vestment principal:
6. Deduct operating cost, vacancy al
Iowance and sinking fund requirement
from rent schedule. There remains the
true net return on the capital invest
ment. 49,
T. Capitalize the true net" at the
rate recognized as standard for the par
tic,llar class and quality OF property
under consideration.
From the justified capital invest
ynent' deduct building or furnishings
and there remains the intrinsic or earn
ing value of the land he states.
"As in bookkeeping, an exact balance
must exist. Every step OF the work Is
open to individual proof by quailneo
expert-land, building. and furnishings;
rent value of space, operating cost, hxed
charges. probable vacancy and life OF
building and contents.