Introduction Rusty Scoven Phone 4047800483 Email RSCOVENwingapnet WinGAP Fall Conference 2018 2 What Why When Where How Why should we use income models Where do you find income models in WinGAP ID: 759638
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Application of Income2018
Slide2Introduction
Rusty ScovenPhone: 404-780-0483Email: RSCOVEN@wingap.net
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Slide3What, Why, When, Where, How
Why should we use income models?Where do you find income models in WinGAP?When should income models be setup?
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Slide4WinGAP Income Knowledge Rating
List the model typesWhat are the two adjustments to income that can be setup in the model schedules?
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Slide5WinGAP Income Knowledge Rating
Should adjustments & cap rates be entered as whole numbers or their decimal equivalents?Which model type would not have a cap rate?Can Unit Rent be entered as a monthly rate?How is the income valuation module accessed for a parcel?
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Slide6WinGAP Income Knowledge Rating
What is the first step in beginning income valuation after the New button is clicked?Can Unit Rent be adjusted on a parcel income screen?Can such adjustments be negative?
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Slide7WinGAP Income Knowledge Rating
Does Effective Gross Income include miscellaneous income?What general property components are income values broken down into?How does a user know that an income valuation record is present for a parcel?
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Slide8WinGAP Income Knowledge Rating
How does a user know that the income value is being used for the digest value?
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Slide9Income Valuation
How will income values be generated?Combination of income schedules & data in WinGAP Income ModelWho is responsible for the values?TAO appraisal staffWhen can I start generating an income value?After Income Models are setupWhere does it begin?The Income Model schedule screenAnd then, on the Real Property Gen Info screen (the main parcel screen)
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Slide10Income Models – Menu Access
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Slide11Income & Parcels
How do I begin after income models are setup?Open a parcel where an income value is desiredClick the Income button
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Slide12Income & Parcels (No Income Value)
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Slide13Income & Parcels
No “*” on Income button indicates no income data
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No * = No Income
Slide14Income & Parcels(Income as Parcel Value)
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Red highlighted Income Text
* on button
Slide15Income & Parcels(Income is not Parcel Value)
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* indicates income record
No red highlight
Slide16Income Detail Screen
Clicking the Income button opens the Income Detail screenThe New button must be clicked to add an Income Detail record to the parcelAt this time, only 1 income record can be added per parcelNew button is disabled after addition of income record is complete
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Slide17WinGAP Fall Conference - 2018
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Before New
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After New
Slide19After New Button?
Data entry beginsIncome Model list is enabledBase, Final & Income columns are disabledData placed in fields based on Inc Model selectionField values cannot be changed except in schedule
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Slide20After New Button?
Values can be keyed inAdj %UnitsMisc IncomePersonal Property ValueCommentsLand Value (pulled from Real Gen Info screen)
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Slide21After New Button?
Check Boxes present forDigest ClassDesignation of Income as Parcel Current ValueButtons available at bottom of screen for various “actions”
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Slide22Basic Data Entry Steps
Select Income Model from list at top of screen% adj to base rates are keyedUnits are enteredMisc Income is enteredAdj % for Vacancy, Expenses & Cap Rate are keyedPersonal Prop value is enteredDigest class is assignedComments enteredDecision made to check Income as Parcel Current ValueClick Apply or OK to save
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Slide23Basic Data Entry Steps
Data entry should be performed only on rows where Base is not zero
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Data Entry on these Rows
Slide24Income Model Selection
Upper portion of screen occupied with list box containing Income Models in scheduleList box compositionVertical scroll on right to move up & down listHorizontal scroll on bottom to view additional columnsColumns reflecting data content
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Slide25Income Model Selection
Initial view of Income Model List boxView showing other columns
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Slide26Adj %
% entered when Base value requires adj% must be a whole numberNo decimals% can be negative-10 is permitted
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Slide27Adj %
Adj % saved as decimal valueAdj % / 100After clicking in Adj % field, Final values filledFinal values reflect Adj % (0 = 1.00)Final values are annual rentIf schedule is setup as monthly, Base x 12 is FinalFinal value formulaBase x ( 1.00 + ( Adj% / 100 ) )
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Slide28Adj % (Monthly Rate)
Adj % = 0300 x 12Adj % = 10300 x 12 x 1.10Adj % = -10300 x 12 x .90
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Slide29Units
Number of units are keyed in the fieldType of units is dependent upon Income Model Square Feet# of rooms# of rental units (1 bedroom apt, 2 bedroom apt, etc)
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Slide30Units
Units should be entered only on rows where Base value is not equal to zeroGRM row, even though greater than zero, should never have units
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Slide31Income
Income column contains a calculated valueFormula for filling Income column:Base x ( 1.00 – ( Adj% / 100 ) ) x UnitsPGI contains income used for GRM and all other methods
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Slide32PGI
PGI – Potential Gross IncomeIncome before Misc Income addedNo Vacancy % or Expenses % appliedSimply, sum of 7 Income fields above
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Slide33PGI
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Slide34EGI
EGI – Effective Gross IncomePGI adjusted by Final Vacancy %Final Vacancy % is applied directly to PGI & then subtracted from PGIPGI – ( PGI x ( Final Vac % / 100 ) ) Misc Income added after Vacancy % adj
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Slide35EGI
518,520 x .12 = 62,222(518,520 – 62,222) + 1,000 = 457,298
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PGI
Vac %
Vac Adj
PGI
Vac Adj
EGI
Misc Inc
Slide36NOI
NOI – Net Operating IncomeNOI is EGI adjusted for Expenses %Final Expenses % is applied to EGI & then subtracted from EGIEGI – ( EGI x ( Final Exp % / 100 ) )
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Slide37NOI
457,298 x .37 = 169,200457,298 – 169,200 = 288,098
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EGI
Exp %
Exp Adj
EGI
Exp Adj
NOI
Slide38Total Value
Non-GRM ModelsNOI capitalized using Final Cap RateGRM ModelsPGI is multiplied by Final GRMTotal Value includes value ofLand Improvements Possibly, personal property
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Slide39Total Value
288,098 ÷ .0999 = 2,883,861Note: NOI is not rounded in actual calculation288,098 ÷ .0999 = 2,883,064288,097.74 ÷ .0999 = 2,883,861
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NOI
Cap Rate
Total Value
Slide40Personal Value
If general income modeling is used, personal property value should be the value generally associated with property typeIf site-specific income modeling, personal property value should be account specificIn either case, value entered is subtracted from Total Value
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Slide41Real Value
Income value of Real Estate after Personal Value deduction2,883,861 – 50,000 = 2,833,861
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Total Value
Personal Value
Real Value
Slide42Land Value
Law requires a separation of value into land component & improvement componentLand Value is pulled from land FMV on Real Property Gen Info screen
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Slide43Imp Value
Value remaining after Land Value is subtracted from Real Value2,833,861 – 545,900 = 2,287,961Caution: If land value is greater than income value, improvement value will be negative!!User will be prompted before leaving screen
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Real Value
Land Value
Imp Value
Slide44Dig Class
Digest Class must be assigned to Income ValueAppropriate Digest Class box is checkedUsed to define Digest Class of improvementA Strat of 1 is automatically assignedLand Digest Class/Strat is taken from Land Screen
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Slide45Comments
Field used to store any comments related to the income valuation of parcelUp to 30,000 characters maybe entered
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Slide46Reset Buttons
Reset buttons are located under Adj & Units columnsButtons are used to set all Adj and/or Units to zero
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Slide47Income as Parcel Current Value
The moment of decision!!If box is checkedIncome value is saved in parcel current value fieldRealprop.curr_valRealprop.income is set to TrueIncome text highlighted in red is displayed on Real Property Gen Info screenIncome value is exported to digest files
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Slide48WinGAP Fall Conference - 2018
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Income Screen in its entirety
Slide49Database & Report Admin
Parcel income data is stored in inc_detailField names are mostly straightforwardExceptionsPotential Gross Income is saved into grm_incEffective Gross Income is found in pgiInc_real is real estate only (land+buildings)Personal Value has been subtracted
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Slide50Income Value Maintenance
If land value changes, Income screen on each impacted parcel must be opened so values will updateIf Income Model changes, Income screen on each parcel assigned to model must be opened. Critical Steps:Select correct Model from list in Model List boxClick in one of the data entry fields to update valuesClick Apply Click Cancel
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Slide51Data Edits for Income
Current value is equal to income value when income is value methodCurrent value is updated to income valueCurrent Value ChecksIncome land value = 0Zero Value EditsIncome land value <> FMV landLand Edits
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Slide52WinGAP Fall Conference - 2018
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Slide53WinGAP Income Knowledge Rating
Answers to follow
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Slide54WinGAP Income Knowledge Rating
Why should we use income modelsCode Section 48-5-2(3)The income approach, if data is available, shall be considered in determining the fair market value of income producing propertiesWhere do you find income models schedule?Under the menu option Tools >> Schedules/TablesShould income models be setup before data entry?YesHow many income model types are available to choose from? 4
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Slide55WinGAP Income Knowledge Rating
List the model types$/SF, $/Room, $/Bedroom, GRMWhat are the two adjustments to income that can be setup in the model schedules?Vacancy & ExpenseShould adjustments & cap rates be entered as whole numbers or their decimal equivalents?Adjustments as whole numbersCap Rates as whole number plus decimal fraction (8.45)
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Slide56WinGAP Income Knowledge Rating
Which model type would not have a cap rate?GRMCan Unit Rent be entered as a monthly rate?YesHow is the income valuation module accessed for a parcel? Clicking on the Income button
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Slide57WinGAP Income Knowledge Rating
What is the first step in beginning income valuation after the New button is clicked?Select the model typeCan Unit Rent be adjusted on parcel income screen?YesCan such adjustments be negative?Yes
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Slide58WinGAP Income Knowledge Rating
Does Effective Gross Income include miscellaneous income?YesWhat general property components is income value broken down into?Land & ImprovementsHow does a user know that an income valuation record is present for a parcel?* on Income button
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Slide59EDITING & REAPPRAISING a parcel with income models attached. As any changes are made to the FMV land values, those changes will push / sync to the income models also. If multiple models exist on a parcel,
wingap will calculate the percentage allocation of the original land value and maintain that ratio when allocating the new land FMV to the income models. Also, as part of this allocation, the improvement value on the income models will be adjusted to reflect the same overall income value.
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Slide60Income Models – created a new feature to allow income CATEGORIES to allow grouping of similar type models together. A schedule table has also been created and is available on the TOOLS > SCHEDULES menu. (4.6.3.1)
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Slide61Income Approach – added feature to allow multiple income models on a single parcel to allow for the complete and proper appraisal of mutli-use properties valued by income. When a user accesses the income screen from the Real Property General Information screen they will first encounter the Income Summary screen listing all the models in use on the parcel. If no models are currently in use – the screen will be empty and the user should click EDIT to access the model details screen for adding or adjusting models. The first model added will automatically be assigned 100% of the parcel’s land value for inclusion in the model. The user has full ability to change the land value. Any additional models added will default to a zero land value and the user may adjust as desired. (4.6.3.1)
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Slide62WinGAP Income Knowledge Rating
How does a user know that the income value is being used for the digest value?Income text highlighted in red will appear to the right of the Current Value
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