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!!!