Transcript Appraising Buildings Powerpoint

Appraising Buildings
ISU – Economics 364X
Tim Janssen
Appraiser
Farm Credit Services of America
Introductions
Name
 Where you’re from (city, county)
 Whether or not you grew up on a farm
 What kind of operation (grain, livestock, etc.)
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Objectives
Understanding the inspection process
 Types of data to be collected during the
inspection process
 Ability to describe the physical
characteristics of the improvements
 Ability to identify functional and external
depreciation issues
 Identify factors used to estimate RCNs
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Preparing for the Inspection
Know what you’re going to see before
you go
 Have a list of questions before going out
 Assessor’s sheet
 Plans, specs, costs on newer construction
 Aerial
 Soil Map
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Information to be Collected
Building Description
 Assess Condition
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(Effective Age/Remaining Economic Life)
Size/Capacity
 Functional Depreciation Issues
 External Depreciation Issues
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Dwellings
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Description
◦ Types - ranch, multi-story, log, manufactured vs.
modular, contemporary
◦ Construction Materials
◦ Interior Features - bedrooms, bathrooms, kitchen
built ins, basement finish, walk-out, fireplaces, floor
coverings, quality, etc.
◦ HVAC System - forced hot air, geo-thermal
◦ Water Source - rural water or well
◦ Septic - tank and laterals or public sewer
Dwellings
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Size - Square Feet of Living Space
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Above Grade vs. Below Grade
Use outside measurements
Ceiling Height - must be at least 5 feet
Porches/Decks - open, 3 season vs. 4 season room
Bay Windows
Basement Finish - not included in square feet
calculation
Dwellings
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Functional Depreciation Issues
◦ Floor Plan and Design
◦ Garage – number of cars, attached, detached, built-in,
basement
◦ Bathroom on second level
◦ Superadequate Features - pool, jet tub?, basketball
court, theatre room?, quality or size above
neighborhood standards, etc.
Dwellings
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External Depreciation Issues
◦ Locational Issues - next to livestock confinement
buildings, gravel vs. paved road, distance to off-farm
employment, etc.
◦ Contemporary Designs
◦ Superadequate for area or economic
conditions
◦ Economic Considerations - unemployment rates,
interest rates, etc.
Dwellings
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RCN Guidelines
◦ Varies greatly depending on size and design
◦ Basic ranch style: $125-175 per square foot
◦ Multi story dwellings typically cost less per
square foot
◦ Log and contemporary designs can cost
significantly more on a per square foot basis
Machine Sheds and Shops
Size - square feet based on outside dimensions
 Height to Eaves
 Features
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◦ Construction - pole vs. wood frame, siding and
roof materials
◦ Interior features - concrete floor, insulation, heat,
interior wall finish, floor drains, etc.
◦ Door size and type - sliding, overhead, bi-fold
◦ Brand or Builder
Machine Sheds and Shops
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Functional and External Issues
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Eave height may limit size of machinery
Dimensions may limit size of machinery
Superadequacy
Small acreage wouldn’t need a high end shop
Machine Sheds and Shops
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RCN Guidelines - Machine Sheds
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4000 SF or less: $8.00-11.00/sf.
4000 SF or more: $7.00-9.00/sf.
Height to eave: 14’-18’
Concrete floor: $4.00-5.00/sf.
Insulation: $1.50-3.00/sf.
Basic electrical: $0.50-1.00/sf.
Overhead doors: $2000-10,000/ea.
Machine Sheds and Shops
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RCN Guidelines - Shops
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1600 SF or less: $25.00-35.00/sf.
1600-10,000 SF or more: $20.00-30.00/sf.
Height to eave: 16’+/Heaters: $3.00-6.00/sf.
Radiant in-floor heat: $4.00-6.00/sf.
Bathroom plumbing: $4.00-10.00/sf.
Low cost office: $2.00-5.00/sf.
Grain Storage - Bins
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Size/Capacity
◦ Normally measured in bushels
 Diameter squared X height X 0.628
 Formula does not include ‘peaking’
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Features
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Dryer
Aeration floor/fans
Stirator
Unloading auger
Ladder
Grain Storage - Bins
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RCN Guidelines
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10,000 to 20,000 bushels: $2.00-2.60/bushel
20,000 to 60,000 bushels: $1.50-2.25/bushel
60,000+ bushels: $1.25-1.75/bushel
Drying bins: +$0.20-0.80/bushel for burners,
controls, stirators, stiffeners, and spreaders
Grain Storage - Handling
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Grain Leg
◦ Bushels per hour
◦ Height
◦ Drops
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Dryers
◦ Bushels per hour
Hogs - Finishing
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Size/Capacity
◦ Building Size - measured in square feet or head
◦ Capacity - 7.5+/- square feet of usable pen space
per head (doesn’t include offices & alleys)
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Building Features and Designs
◦ Modern - double curtains, fully slatted, climate
controlled, natural or tunnel ventilation
◦ Old Designs - open front, modified open front,
“Cargill” finishers
Hogs - Finishing
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Condition Issues
◦ Economic Life: 25 years
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Finishing vs. Wean/Finishing Contracts
◦ Finishing: $28-36/pig space
◦ Wean/Finishing: $34-42/pig space
◦ Terms: 5-7 years but had been 10 years
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External Depreciation Issues
◦ Hog prices
◦ Availability of grower contracts
Hogs - Finishing
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RCN Guidelines
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Finishing: $205-220/pig space
Wean/Finishing: $215-230/pig space
Brooders/Feed Mats: $5-8/pig space
Generators and compost facilities would add
to cost
◦ Offices and showering facilities can add to
cost
Hogs - Farrowing
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Size/Capacity
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Normally measured in # of sows
6.0 to 6.5 Sows per farrowing crate
Gestation crates
Holding pens
Gilt development/isolation space
Hogs - Farrowing
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Functional Issues
◦ Adequate gestation space
◦ Adequate sow movement/holding space
◦ Adequate gilt isolation and development
space
◦ Sow flow
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External Issues
◦ Feeder pig and market hog prices
◦ Environmental regulations, permitting, interest
rates, etc.
Hogs - Farrowing
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RCN Guidelines
◦ $1200 to 2000 per sow
◦ Factors Affecting RCN
 Office facilities
 Developer facilities
 Gestation type - pen vs. crate
Hogs - Nursery
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Size/Capacity
◦ Measured in pig spaces
◦ 3.0-4.0 square feet per head
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Functional Issues
◦ Separate site for bio-security
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External Issues
◦ Feeder and market hog prices, demand for
feeder pigs, availability of contracts, etc.
Hogs - Nursery
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RCN Guidelines
◦ $150 to $200 per pig space
◦ $30 to $45 per square foot
Cattle – Feedlots & Confinements
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Size/Capacity
◦ Square feet per head
 Confinement
 40 sf/head for solid floor
 25 sf/head for slatted floors over pits
 Open lot
 225 sf/head
◦ Bunk space per head
 Confinement: 10” per head
 Open lot: 12” per head
Cattle - Feedlots & Confinements
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RCN Guidelines
◦ Open Lot: $225-275/head
◦ Confinements:
 Solid Floor: $10-15/sf. or $500-700/head
 Slatted Floors & Pit: $21+/sf. or $1000+/head
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Other Considerations
◦ Add $125-275 per head for feedmill, grain
storage, commodity shed, processing building, etc.
◦ Capacity can be limited by permits and manure
storage
Cattle - Feedlots & Confinements
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Functional Issues
◦ Bunk space vs. lot space
◦ Feed storage, mixing, and handling system
◦ Manure storage and handling system (settling
basin)
◦ Receiving/working/shipping facilities
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External Issues
◦ Cattle prices
◦ Feed prices
◦ Environmental regulations
Poultry – Laying Hens
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Size/Capacity
◦ Stacked Cages: 53-80 sq. in./bird
 (67 sq. in. per bird is fairly typical)
◦ Cage Free
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Construction and Design
◦ Hi-Rise vs. Stacked
◦ Egg Processing - packer, grader, breaker
◦ Manure Storage and Handling
Poultry – Laying Hens
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RCNs
◦ Pullet Barns: $10-12/bird
◦ Layer Barns: $15-20/bird for standard cage design
◦ Packing, breaking, and grading facilities can add
significantly to the cost
Poultry – Laying Hens
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Functional Depreciation Issues
◦ Processing building and equipment ‘right sized’
for the number of layers
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External Depreciation Issues
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Feed Costs
Egg Prices
Availability of Contracts
Customer Preferences - cage-free vs. cages, liquid
egg vs. table eggs, etc.
Poultry - Turkeys
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Size/Capacity
◦ Brooder: 0-5 lbs., 0.6-0.7 sf/bird
◦ Finish Light Birds: 20-25 lbs, 3.0-3.5 sf./bird
◦ Finish Heavy Birds: 30-40 lbs, 3.5+ sf/bird
Construction and Design
 RCNs
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◦ Brooders: $13.00-18.00/sf.
◦ Finishers: $9.00-13.00/sf.
Poultry - Turkeys
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Functional Depreciation Issues
◦ Brooder space vs. finish space
◦ Brooders turn every 4.5-5.5 weeks vs.
finishers turn every 15-19 weeks
◦ Brooding and finishing on same site
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External Depreciation Issues
◦ Long-term grower contract available?
◦ Location to nearest packing plant
◦ Location relative to neighboring buildings and
livestock facilities (bio-security)
Other Considerations
Some buildings don’t contribute any
significant value (corn cribs, old barns, etc.)
 Permits
 Wind Turbines
 Underground Storage Tanks
 Bio-security issues relating to location of
livestock facilities
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Objectives Reviewed
Understanding the inspection process
 Types of data to be collected during the
inspection process
 Ability to describe the physical
characteristics of the improvements
 Ability to identify functional and external
depreciation issues
 Identify factors used to estimate RCNs
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Conclusions and Wrap Up
Questions regarding inspections
 Questions regarding appraisal profession
 Appraiser Gift Bag
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Contact Information
[email protected]
Office Phone: 641-792-9403
THANK YOU!!!