Question

replacement cost new was $12,060,000 after deductions for depreciation and adding back land value, the value estimated through the cost approach was $8,000,000. What happens if stabilized NOI increases to $730,000.

Answer 1

Property Value = Land Value + (Cost New – Accumulated Depreciation).

Property value = 8,000,000 ( as you have mentioned )

Stabilized net operating income is the anticipated income minus expenses that are subject to change and have been adjusted to indicate normally stabilized operations of a property.

Generally, if the stabilized NOI increases then the property has more potential to generate to value at the cost of less replacement works. So in this case the replacement cost will increase which will lead to a higher property value.