![residual income definition residual income definition](https://i2.wp.com/www.shikmarubin.com/wp-content/uploads/2016/01/residual-income-chart.png)
We will discuss the land residual technique in this Lesson the building (improvement) technique was discussed in the previous lesson, Lesson 16.
![residual income definition residual income definition](https://i1.wp.com/www.azam.biz/residual-income/residual-income-stream.gif)
The previous lesson, Lesson 16, discussed the:
![residual income definition residual income definition](https://www.greatpassiveincomeideas.com/wp-content/uploads/2013/09/Money-Target-by-jscreationzs.jpg)
In this Lesson we will make an allowance, in determining the income imputable to the improvement(s), for the investment in the wasting asset. (4) Use “IRV” to capitalize the income residual to the unknown value component into value.Īs was mentioned in Lesson 15, the appropriate capitalization rate for improvements must make an allowance for recapture (return OF the investment), as well as for yield (return ON the investment) and ad valorem property taxes. (3) Subtracting the income attributable to the known value component from the total property income leaves you with the income residual to the unknown value component. (2) Using “IRV”, determine the income imputable to the known value component. (1) First determine the income the property will earn under the highest and best use. The material in this lesson will be very familiar with what was studied in Lesson 16 the residual techniques are similar. Lesson 17 – The Land Residual Techniques of Income Capitalization (The Income Approach to Value)