A property has a land-to-improvements value ratio of 20%-80%. If improvements were built at $120/SF, what is the current value of the property using the cost approach?

To determine the value of the property using the cost approach, we first need to understand the land-to-improvement value ratio of 20% for land and 80% for improvements. This indicates that the overall value of the property will be derived from both the land and the improvements made on it.

Given that the improvements were built at a cost of $120 per square foot, we can set a framework to calculate the value of the improvements based on their proportion in the total value. To begin, we should decide how much total value corresponds to the known cost per square foot.

Assuming that we denote the total value of the property as V, we can express the value of the improvements as 80% of that total value:

Improvements Value = 0.80V.

From the given information, the cost to build the improvements is $120/SF. We can express the value of the improvements in terms of square footage (SF):

If improvements are valued at $120/SF, then for a certain area (or total square footage), the total value for the improvements becomes $120 * SF.

Now, we set up the equation based on the improvements’ relationship with the total property value:

0.80V = Cost of Improvements