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A. 'Choice of Appraisal Method 
    The traditional appraisal approach anticipates application of three 
    approaches to value--the market comparison approach, the cost approach,
    and the income approach. The different conclusions reached are then 
    reviewed and integrated into a single value conclusion. However, in 
    this case the market approach and the cost approach are both misleading.
    The market comparison approach requires comparison of like to like, 
    with minor adjustments for variations within a set of sales data, in-
    volving properties with relatively current and frequent transactions.
    However, major institutional complexes in scattered locations outside
    of heavily populated metropolitan centers are each unique commodities
    and do not fit the requirements of the typical market comparison ap 
    proach. Adjustments of sales prices to reflect differences in times,
    circumstances of the parties, or physical factors in the property must
    be purely speculative on the part of the appraiser. 
    The cost approach requires a basic assumption that the improvements 
    represent highest and best use of the site from the veiwpoint of another
    user in the market for such a property. Without this assumption sub-
    stantial allowances for econornic and functional obsolescence must be
    made, and on a complex which cost $17 million in a small northern Wis-
    consin community, these adjustments must necessarily be rough approxi-
    mations on the part of the appraiser. 
    However, every property has a market for investment purposes if some
    income can be generated therefrom.     Investors will pay the present
value 
    of the cash income from all sources anticipated over~tlime from owner-
    ship of the property. 
    For unique property which must be converted to rental use and is without
    a rental history, the type of income appraisal required is termed in-
    vestment simulation. 
    The, leading theorists* in appraisal require that accurate appraisal
    go beyond the traditionalaverage income .(before debt service and income
    taxes) capitalized by some average rate of return on total investment.
    Modern theory holds that a statement of highest and best use leads 
    naturarlly to an inference about the most likely type of user-buyer.
A 
    given group of buyers allows you to be reasonably positive as to how
    they make their calculations on the investment value of each alternative
    property which they might purchase.     It is these calculations which
    the appraiser must simulate. 
    A private investor is not only concerned with revenue and expenses but
    with the power of leverage, the impact of federal income and estate tax-
    es, and the cash solvency of operations over time. Private investment
      is made in anticipation of a profit and sophisticated investors today
      are concerned with profit after federal taxes. This profit may arise
      from operating cash revenue from the real estate, from capital gains
      realized on sale of the real estate, from surplus proceeds of a refin-