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.)
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
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
Information to be Collected Building Description Assess Condition
(Effective Age/Remaining Economic Life)
Size/Capacity Functional Depreciation Issues External Depreciation Issues
Dwellings
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
Size - Square Feet of Living Space ◦ ◦ ◦ ◦ ◦ ◦
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
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
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
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
◦ 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
Functional and External Issues ◦ ◦ ◦ ◦
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
RCN Guidelines - Machine Sheds ◦ ◦ ◦ ◦ ◦ ◦ ◦
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
RCN Guidelines - Shops ◦ ◦ ◦ ◦ ◦ ◦ ◦
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
Size/Capacity ◦ Normally measured in bushels Diameter squared X height X 0.628 Formula does not include ‘peaking’
Features ◦ ◦ ◦ ◦ ◦
Dryer Aeration floor/fans Stirator Unloading auger Ladder
Grain Storage - Bins
RCN Guidelines ◦ ◦ ◦ ◦
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
Grain Leg ◦ Bushels per hour ◦ Height ◦ Drops
Dryers ◦ Bushels per hour
Hogs - Finishing
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)
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
Condition Issues ◦ Economic Life: 25 years
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
External Depreciation Issues ◦ Hog prices ◦ Availability of grower contracts
Hogs - Finishing
RCN Guidelines ◦ ◦ ◦ ◦
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
Size/Capacity ◦ ◦ ◦ ◦ ◦
Normally measured in # of sows 6.0 to 6.5 Sows per farrowing crate Gestation crates Holding pens Gilt development/isolation space
Hogs - Farrowing
Functional Issues ◦ Adequate gestation space ◦ Adequate sow movement/holding space ◦ Adequate gilt isolation and development space ◦ Sow flow
External Issues ◦ Feeder pig and market hog prices ◦ Environmental regulations, permitting, interest rates, etc.
Hogs - Farrowing
RCN Guidelines ◦ $1200 to 2000 per sow ◦ Factors Affecting RCN Office facilities Developer facilities Gestation type - pen vs. crate
Hogs - Nursery
Size/Capacity ◦ Measured in pig spaces ◦ 3.0-4.0 square feet per head
Functional Issues ◦ Separate site for bio-security
External Issues ◦ Feeder and market hog prices, demand for feeder pigs, availability of contracts, etc.
Hogs - Nursery
RCN Guidelines ◦ $150 to $200 per pig space ◦ $30 to $45 per square foot
Cattle – Feedlots & Confinements
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
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
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
Functional Issues ◦ Bunk space vs. lot space ◦ Feed storage, mixing, and handling system ◦ Manure storage and handling system (settling basin) ◦ Receiving/working/shipping facilities
External Issues ◦ Cattle prices ◦ Feed prices ◦ Environmental regulations
Poultry – Laying Hens
Size/Capacity ◦ Stacked Cages: 53-80 sq. in./bird (67 sq. in. per bird is fairly typical)
◦ Cage Free
Construction and Design ◦ Hi-Rise vs. Stacked ◦ Egg Processing - packer, grader, breaker ◦ Manure Storage and Handling
Poultry – Laying Hens
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
Functional Depreciation Issues ◦ Processing building and equipment ‘right sized’ for the number of layers
External Depreciation Issues ◦ ◦ ◦ ◦
Feed Costs Egg Prices Availability of Contracts Customer Preferences - cage-free vs. cages, liquid egg vs. table eggs, etc.
Poultry - Turkeys
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
◦ Brooders: $13.00-18.00/sf. ◦ Finishers: $9.00-13.00/sf.
Poultry - Turkeys
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
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
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
Conclusions and Wrap Up Questions regarding inspections Questions regarding appraisal profession Appraiser Gift Bag
Contact Information
[email protected] Office Phone: 641-792-9403 THANK YOU!!!
