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From appraisal-valuation
Valuates land via income approach: capitalizes market rent for telecom ground leases, agricultural land, ground leases, and easements. Includes cap rate selection.
npx claudepluginhub reggiechan74/vp-real-estate --plugin appraisal-valuationHow this skill is triggered — by the user, by Claude, or both
Slash command
/appraisal-valuation:income-approach-expertThe summary Claude sees in its skill listing — used to decide when to auto-load this skill
The income approach estimates land value by capitalizing the net operating income (NOI) that the land generates as a rental-producing asset. It is particularly applicable to:
ARCHITECTURE.mdQUICKSTART.mdREADME.mdcap-rate-tables.mdcomparable-rent-catalog.mdland_capitalization_calculator.pyland_rental_input_schema.jsonmodules/__init__.pymodules/cap_rate_selection.pymodules/income_reconciliation.pymodules/output_formatters.pymodules/rent_analysis.pymodules/validators.pysamples/simple_land_lease_input.jsonsamples/telecom_tower_site_input.jsonscripts/shared_utils/README_FINANCIAL_UTILS.mdscripts/shared_utils/__init__.pyscripts/shared_utils/financial_utils.pyscripts/shared_utils/land_assembly_utils.pyscripts/shared_utils/negotiation_utils.pyProvides five valuation methods for utility transmission, pipeline, rail, telecom, and temporary construction easements, compliant with USPAP, CUSPAP, Yellow Book, and IVS.
Computes Net Effective Rent (NER), NPV, breakeven analysis, and Ponzi Rental Rate for commercial lease evaluation. Use when comparing lease offers with varying free rent, TI, escalation, and term structures.
Computes residual land value across multiple use types to determine highest-and-best-use (HBU) and maximum supportable land price. Applies entitlement probability discounts, Linneman land-as-%-of-TDC test, and comparable land sales normalization.
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The income approach estimates land value by capitalizing the net operating income (NOI) that the land generates as a rental-producing asset. It is particularly applicable to:
Fundamental formula:
Land Value = Net Operating Income ÷ Capitalization Rate
worked-examples.md.The foundation of income approach valuation is determining defensible market rent for the land use.
Ideal comparable criteria: same use, same market (5-15 km), same lease type, within 12-18 months of valuation date, arm's length.
Common adjustment directions:
For detailed evidence sources, full comparable catalogs (telecom, agricultural), and worked adjustment examples, see comparable-rent-catalog.md.
The cap rate converts annual NOI to present value. Selection is the highest-leverage assumption in the analysis: a ±0.5% change typically moves value ±8-10%.
Method 1 — Market extraction (preferred when data exists)
Cap Rate = NOI ÷ Sale Price
Extract from 3+ recent arm's-length sales of comparable income-producing land. Reconcile to a single rate or tight range.
Method 2 — Band of investment (weighted cost of capital)
Cap Rate = (LTV% × Debt Yield) + (Equity% × Equity Yield)
Typical inputs: LTV 50-75%, debt yield 4-6%, equity yield 8-12%.
Method 3 — Build-up (risk-free rate plus premiums)
Cap Rate = Risk-Free Rate + Liquidity Premium + Inflation Premium + Business Risk
Each component must be justified by market evidence.
For comprehensive cap rate ranges by property type, agricultural rent levels by soil class, full band-of-investment and build-up worked components, see cap-rate-tables.md.
Gross Rental Income = Market rent × applicable unit
Less: Vacancy / collection loss
Plus: Other income (parking, utilities, equipment)
= Effective Gross Income
Less: Operating expenses
- Property taxes
- Insurance
- Maintenance and repairs
- Management fees (typically 3-5% of GRI)
- Utilities (if landlord-paid)
= Net Operating Income
Subject: Cellular tower ground lease, urban-fringe site, stabilized national-carrier tenant.
| Item | Value |
|---|---|
| Market rent | $32,000/year |
| Vacancy | 0% |
| Property tax | $2,000 |
| Insurance | $800 |
| Maintenance | $1,200 |
| Management fee (5% × $32,000) | $1,600 |
| Total OpEx | $5,600 |
| NOI | $26,400 |
| Cap rate (extracted, 3 comps) | 6.0% |
| Land value = $26,400 ÷ 0.060 | $440,000 |
Sensitivity at ±0.5% cap rate: $480,000 (5.5%) to $406,154 (6.5%). Conclude $440,000 with range $406K-$480K.
For full walkthroughs (telecom $35K-rent build, 80-acre Class 2 agricultural with sales reconciliation, 25-year shopping-center ground lease with reversion, perpetual easement, multi-variable scenarios), see worked-examples.md.
Multi-decade leases with creditworthy carriers; stable income, limited tenant pool, carrier-built improvements, location specificity. Typical cap rates 5.5-7.0% (ground), 6.0-7.5% (rooftop), 7.0-8.5% (co-location).
Commodity-exposed rent; annual / short-term leases; deep buyer pool; capital appreciation typically priced in (sales extraction yields 2-4% cap rates that under-state NOI yield). Use 4.0-6.0% cap rate for income approach on partially indexed rent; reconcile against sales.
Value the fee in two layers:
Fee Value = (Interim Rent ÷ Cap Rate) + (Reversion Value ÷ (1 + Cap Rate)^n)
Use a lower cap rate for the contractual interim stream and a higher discount rate for the long-dated reversion.
Capitalize the income-loss equivalent (or direct easement payment) at a low cap rate (4-5%) given perpetual nature and low risk.
For per-use cap rate ranges and rent benchmarks, see cap-rate-tables.md. For full per-use valuation walkthroughs, see worked-examples.md.
Always cross-check the income approach against sales comparison when 3+ comps exist.
A blended conclusion (e.g., weighted average) is appropriate when both approaches yield credible but divergent results. See the agricultural reconciliation example in worked-examples.md.
Tool: land_capitalization_calculator.py (located in same folder as this SKILL.md)
Capabilities:
Input format (JSON):
{
"subject_property": {
"property_type": "telecom_ground_lease",
"location": "Chicago, IL",
"size_acres": 0.5,
"valuation_date": "2024-11-17"
},
"market_rent_analysis": {
"comparable_rents": [
{
"rent_annual": 32000,
"adjustments": {"term_adjustment": 0},
"source": "Similar tower site, same carrier"
}
],
"concluded_market_rent": 32000
},
"operating_expenses": {
"property_tax": 2000,
"insurance": 800,
"maintenance": 1200,
"management_fee_percent": 5
},
"cap_rate_analysis": {
"method": "market_extraction",
"cap_rate_range": {"low": 0.06, "high": 0.09},
"concluded_cap_rate": 0.060
}
}
Usage:
/income-approach-land path/to/rental_data.json
/income-approach-land path/to/rental_data.json --output $CLAUDE_PROJECT_DIR/Reports/2025-11-17_land_valuation.md
Input Schema: land_rental_input_schema.json
7-Step Workflow:
land_rental_input_schema.jsonReport Naming: $CLAUDE_PROJECT_DIR/Reports/YYYY-MM-DD_HHMMSS_income_approach_{site_type}.md
Direct calculator invocation:
cd ${CLAUDE_PLUGIN_ROOT}/skills/income-approach-expert/
python land_capitalization_calculator.py input.json --output results.json --verbose
Output: NOI breakdown, cap rate justification, land value conclusion, sensitivity tables (±0.5% cap rate, ±5% rent), reconciliation with sales (if provided), PDF appraisal-grade report.
For defensible appraisal work, document: