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As currently improved, the value of the property under alternative 1, which is its current use as a home and 5-acre site is $180,000.

The amount a buyer is ready to pay for a property and the sum the seller will take make up the fundamental definition of a property's value. This agreement determines the property's worth in a specific market at a specific period.

Add up all of a property's value, including maintenance expenditures, taxes, insurance, fees, and vacancy costs. Next, deduct all costs from the annual rental income (calculated above). Subtract the result from the total value of the property. Your capitalization rate is the last percentage.

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