Hi my name is Dru I am new here and I have an assessed valuation question that maybe someone could possibly help me with. The actual topic is Business Math/Assessed Valuation
Consider the following situation: An entrepreneur wants to purchase a floral shop business. He has a significant amount of his own money to invest and thinks he can get a loan for an additional $25,000 from his bank. Which of the following options do you think he should choose?
- Option A is a small, very busy floral shop in a downtown area that is undergoing renovations. The area has shops, apartments, and offices, all within walking distance of the store. A new parking area is being built. Other improvements may be in the works. The property is assessed at $75,000 and the property taxes for the current year are $2.20 per $100.
- Option B is a larger floral shop in a suburban area for which significant growth is expected in the next five to ten years. (Right now, however, business is at least 30 percent better in the store in Option A.) The shop is in a small shopping complex with only two other stores. The area is zoned commercial, however, and there are rumors that that a major mall may come in. The area is quite countrified right now but there are a couple of housing developments being built within driving distance. The property is assessed at $120,000 and the property taxes for the current year are $19 per $1000.
Which option do you think would be better for this entrepreneur? Consider these questions as you make your recommendation:
- Can the entrepreneur tell which is the better deal by comparing the assessed values? Why or why not?
- Which property has higher taxes? How should that affect the decision?
- What additional information would help this entrepreneur make his decision? Where would you suggest that he go to get this information?
- Finally, what do you think will happen to the assessed value of each property?
Which decision you would advise the entrepreneur to make.