Define Surplus Productivity in Real Estate

"A Deep Dive for Real Estate Appraisers"

A few additional things you should know about surplus productivity:

- It's an important measure of a property's value: Surplus productivity is often used by real estate appraisers and investors to determine the value of a property. A property with a high surplus productivity is generally considered more valuable than one with a low surplus productivity.

- It can be influenced by many factors: Surplus productivity can be affected by factors such as the location of the property, the condition of the property, the rental rates, and the expenses associated with the property.

- It can be improved: Property owners can increase the surplus productivity of their property by reducing expenses, increasing rental rates, or improving the condition of the property.

- It's not the same as cash flow: Surplus productivity only takes into account the net income of a property, after expenses have been paid. It does not take into account any financing or debt service costs, which are included in a property's cash flow.

As a real estate appraiser, understanding surplus productivity is important because it's a key factor in determining the value of a property. It's important to be aware of the various factors that can influence surplus productivity and to consider ways to improve it when valuing a property.