Build Approach

Note that the denial of the need to consider income entrepreneur in the cost approach is often justified by reference to the principle substitution, which is considered a fundamental principle of the cost approach in the wording: "a reasonable buyer would pay for a property larger than the amount of money needed to purchase a similar site and the building with the equivalent utility without undue delay, taking into account equitable financial compensation for time spent on construction. " Opponents of the accounting profit entrepreneurs believe that such formulation allows us to consider the cost approach to the assessment as an approach that reflects the interests of the user creating the object for itself ("why did he then know and take into account the profit the entrepreneur?"). To begin with reversible attention to the unacceptability of the use of calculating market value as the cost of the facility for their own use, as in accordance with the definition of the market value of the latter is value in exchange – in a hypothetical transaction that can be modeled by the appraiser. At the same time, we note that in the formulation of the principle referred to financial compensation for time spent on construction, and that compensation should be calculated taking into account the time value of money: on the construction of the creator of the object "freezes" and their borrowed funds – instead of earning income from the use of a facility that he could buy developer. That is, in this case should be the capitalization of all costs of the construction project, which will also lead to the formation of the amount of income on assets (profit entrepreneur), as defined in 2 by the build-up (Capitalization) costs at a rate of return on capital. It should be borne in mind that during the construction "for himself" in a specified rate of return on capital should be presented awards for all of the risks of the investor, with the exception of the risk low liquidity of the sale of the object (this exception should be taken into account when assessing the property in the current business practices cost approach).