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Using Deductive Reasoning to Build a Local Property Capitalization Rate from the Capital Market and the Internet

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  • Donald R. Epley

Abstract

This paper illustrates a new unique method to estimate a local capitalization rate using Internet data available in every office. It relies on the initial belief that all capitalization rates must begin with a national rate, which is adjusted by local market conditions for a specific land use. A major contribution is the illustration and recommendation of a new approach that relies on deductive reasoning from the national to the local markets rather than the traditional inferential approach that relies totally on local transactions. The conclusion is a new method to estimate a local capitalization rate should be added to every appraiser's toolkit to analyze market rates and values.

Suggested Citation

  • Donald R. Epley, 2015. "Using Deductive Reasoning to Build a Local Property Capitalization Rate from the Capital Market and the Internet," Journal of Real Estate Literature, Taylor & Francis Journals, vol. 23(1), pages 139-156, January.
    • Handle: RePEc:taf:rjelxx:v:23:y:2015:i:1:p:139-156
    DOI: 10.1080/10835547.2015.12090394
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