Equestrian Property Appraisals

In Las Vegas one of the first issues an appraiser has to deal with when approached to value an equestrian property is, “what is its highest and best use?” Many equestrian properties include 2 to 5 Acres of land, and the question for an appraiser is, “is the property worth more vacant or is it worth more improved?” To answer the question an appraiser basically has to complete two appraisals, one of the land, the other of the improved property including the land. It seems like common sense that the improvements would add value, and in many cases they do, but there are situations that occur when the land “as vacant” becomes more valuable for an alternate use than for an existing residential use.

In Las Vegas there are fewer and fewer equestrian properties that have site areas that are 5 Acres or more, most are now 2.5 Acres or less. Why? Because vacant land that has been used for giant arenas and ancillary builds is now considered to be too expensive to hold for a horse use. Basically, if you dedicate 2.5 Acres to the horses you have to forego the $ 400k to $ 500k it’s worthwhile you are using it and pay substantial property taxes on it. It’s a lot when you consider the fact that having a decent home and some equestrian improvements on the first 2.5 Acres could cost you over $ 500k.

Equestrian improvements that are quite expensive to install often don’t register much for appraisers. You want that 400-foot deep well to stay off of municipal water and it will cost you well over $ 50k but for most appraisers it is a redundancy. Many potential buyers won’t care if you have that well as long as they have sufficient water to serve the property.  How much value is added by a few more horse stalls gained via the addition of a newly constructed metal or wood building? Maybe a lot if you are running an equestrian-related boarding or riding business. Probably not so much if you are just looking at real estate value.

A cost approach to value will consider individually the value of the arena, corrals, stables, barns, fences, extra garages, tack room, onsite living quarters and other physical characteristics, but the approach is rarely relied upon by appraisers because buyers don’t value equestrian properties that way. Many appraisers will look at the costs but few will give the approach much weight.

Recognizing that an equestrian business is not included as part of the real property is important. The time, effort, management and supplies that it takes to engage in a boarding or riding business are not going to be considered by a real property appraiser. A business appraiser familiar with equestrian businesses can evaluate it with or without the value of the underlying land.

As soon as I start hearing about the income from this and the income from that I immediately ask about the business being conducted on the property. If there is a lease of the property in its entirety that is something that I want to analyze. If it’s income from the rental of individual stables (boarding), feeding, exercising horses / riding or other horse-specific services it’s not derived from the real estate.

There are many equestrian property buyers who are interested in a property just for themselves.  They don’t care about the excesses as long as they don’t have to pay a lot for them.  The minute you say “yes, but I have 6 extra garages and 12 stables they may balk if they can’t imagine ever using them.  A buyer who wants to be in the business of caring for horses will welcome the excess but there are relatively few of those buyers in the market. 

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

Article source: http://www.appraisalarticles.com/Real-Property-Appraisal/Equestrian-Appraisals/4678-Equestrian-Property-Appraisals.html