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Band Of Investment
Band of investment is a name given to an income property appraisal method to determine it’s capitalization rate.
The capitalization rate plays a vital role in helping appraisers estimate the value of a property or property portfolio as it is essential in calculating net operating income.
Band of investment takes into account equity, mortgage, interest rate, etc.
When it concerns a portfolio of assets, the weightage of each property will also have to be considered.
Interest rates help enable appraisers to determine the returns that investors would fairly expect from such an investment with a particular amount of equity outlay.
With the interest rate and returns determined, they are worked into the equation according to the allocated portion of mortgage debt and equity.
The final figure after putting the numbers through the process will be the capitalization rate in which the appraiser required to estimate the value of the property.