What cap rate would you apply to your spouse? A hotel property owner asked me this question. As a commercial appraiser, I was confused. His question came up after I asked him why in the world would he buy a hotel in the middle of nowhere. The only nearby economic driver was a nuclear power plant. I told him I thought it was risky. He told me that getting married was a bigger risk and a leap of faith, much more than real estate.
His point was we all do things that involve risk, whether it's measured from an appraisal valuation viewpoint or just life stuff in general. But it did get me thinking. My first thought was that my awesome wife (Brenda Dohring, MAI who publishes our sister newsletter RealWired) has a very low cap rate - low risk - very desirable asset. But I dug a little deeper.
We make decisions all day long about our personal and professional lives. If we drive too fast we run the risk of getting a ticket or possibly into an accident. If we don't take care of ourselves we might become emotionally and physically lazy.
So what kind of a return or cap rate would you put on yourself and your appraisal career? Are you a Class C office building with high vacancy and functional obsolescence or a long-term lease with Starbucks with corporate signature? Hopefully, you're not a condo conversion or vacant land without entitlements.
Risk: A state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome. So is your appraisal career or firm under any threat? What about increased new competition, loss of key senior appraisers, lack of effective marketing, drop-off of appraisal volume and commoditization trend for commercial appraisals?
You can invest in real estate or the stock market,
but I think your best bet is to invest in yourself. Now is the time to lower your personal cap rate by investing time and money in new appraisal production techniques - comps management software, report writing software and appraisal tracking management systems. So do a gut check. You don't need the band of investment or debt coverage ratio analysis to determine where you should be in your appraisal career. I think you know.
If you have an appraisal "best practice" you would like to share, please forward to Jeff. 
