What four criteria does the Principal of Highest and Best Use consider?

The Principal of Highest and Best Use is a vital concept in real estate that identifies the most profitable use of a property that is legally permissible, physically possible, financially feasible, and maximizes productivity.

Legal permissibility refers to the zoning laws and regulations that dictate what can be done on a specific piece of land. This ensures that the proposed use complies with local laws.

Physical possibility considers the actual physical characteristics of the property, such as its size, shape, and location, which affect what can be built or utilized on the site.

Financial feasibility assesses whether the proposed use can generate the necessary income to justify the investment. This involves analyzing market conditions and potential returns related to the specific use.

Maximum productivity evaluates what uses would yield the highest return on investment. This involves comparing different possible uses and determining which one would be the most advantageous in terms of revenue generation.

The combination of these four criteria provides a comprehensive approach to determining the optimal use of a property, ensuring that all critical factors are taken into account for effective real estate decision-making.