The prospective Los Feliz commercial property buyer is primarily interested in the potential net return and tax shelter the property will provide. The price the buyer is justified in paying for the property is a measure of his prospects for a net return from his investment. Real estate as an investment must not only compete with other real estate, but also with stocks, bonds, annuities, and other similar investment areas.

The Los Feliz commercial real estate appraiser must explore the rental market and compare the income-producing capabilities of one property to another. Thus, the Los Feliz commercial appraiser must rely heavily on the income approach to value to determine the net economic rent the property is capable of yielding and the amount of investment that is required to affect the net return at a rate investors would expect. The Los Feliz commercial real estate appraiser must complete a comprehensive study of the income-producing capabilities of comparable properties and an analysis of present day investment practices. Because commercial property is not bought and sold as frequently as residential property, the Los Feliz commercial real estate appraiser cannot establish the sales market as readily as for residential property.
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