112 Flashcards
The appraisal process is a ____ logical method of collecting, analyzing, and processing data into value estimates
systematic
Definition of the problem is the ___ step in the appraisal process
1st
The ____ of an appraisal is usually to estimate an opinion of a type of value, most often ___ value
purpose, market
The type and extent of research and analyses in an appraisal or review assignment is referred to as the ___________
scope of work
In order to determine the appropriate scope of work an appraiser must properly ______ to be solved
identify the problem
4 tests of HBU
legally permissable
physically possible
financially feasible
maximum productivity
Results of deducting expected vacancy and collection losses from PGI, then adding misc income
Effective Gross income
Which capitalization method/s use the IRV equation? A direct cap B yield cap C both D neither
C
Investment Criteria includes all but: A Profit B Risk C Supplies D Illiquidity
C
Investors are looking for a return ___ and a return ___ their capital
of, on
Which of the following is not a return on rate? A interest rate B discount rate C yield rate D recapture rate
D
The principle of anticipation states that value is the present worth of all ______ future benefits derived from a property
anticipated
Leverage is the borrowing of funds in anticipation of earning a ____ return than the cost of the borrowed funds.
greater
Leverage can be all but: A positive B prevailing C negative D neutral
B
If the overall cap rate is 8%, mortgage constant is 7% and equity cap rate is 11%, leverage is: A positive B negative C neutral D prevailing
A
The normal interest rate is the same as the effective rate only when there is ___ compounding
annual
What is the FW of 1 factor for 5 years at an interest rate of 10% compounded annually?
1.610510
What is the present value of 5000 that will be received in 10 years assuming 6% interest compounded annually?
$2792
An investor will need 15,000 to replace the roof in 6 years. If he can earn 3% on his money compounded annualy, how much must he put away each year?
$2319
A buyer would like to borrow 100,000. If interest rates are 6% compounded monthly and a loan term of 15 years can be attained, what will the monthly payments be?
843.86
The yield on a loan at 8% compounded monthly is greater than the yield of an 8% loan compounded annually: T or F
T
The effect of lesser fee simple rights had on the sale price should be considered: A In all cases with jurisdiction B Never C Only if value is higher D Only Retail properties
A
An expense ____ is a clause that limits a tenants portion of operating expenses to a certain amount
cap
An expense ____ is a clause that limits the landlords obligation to pay expenses to a certain amount
stop
Property is advertised for rent at $20/sqft annually. The owner offers to enter into a 5 yr lease that provides free rent for the first 6 months. What is the effective rent per sq ft annually for this 5 yr lease? A 20 B 18 C 22 D 9
B
The difference between PGI and EGI is A Expenses B taxes C vacancy and collection losses D excess rent
C
EGI can be forecast for A only 1 yr B only past 3 yrs C multiple years D none
C
if net income changes as follows: 24000, 24720, 25462, 26225, 27012, this is an example of what pattern? A Constant Ratio-increase B Constant Ratio-decrease C straight line D step-up
A
The function to which the appraisal is put is its A intended use B Intended user C purpose D meaning
A
The IRV equation is used in A cost new estimates B Behavior capitalization C Both direct and yield caps D neither direct or yield caps
C
Annualized yield rate on capital that is generated by an asset or within a group of capital assets over a period of ownership is : A nominal tax rate B effective tax rate C internal rate of return D overall cap rate
C
__________ are among the best sources of information indicating rates of return for income producing properties
Market Surveys
The ___________ involves a split rate technique: a speculative risk rate for profit and a safe rate for a sinking fund to account for the recovery of invested capital.
Hoskold premise
The mortgage cap rate uses the symbol A Ye B Ro C Yo D Rm
D
Regarding an investment property, the income and value are changing exponentially at a constant ratio. The overall rate Ro is 10% and the constant and the constant rate of change is 2%. What is the indicated yield rate Yo? A 10% B 8% C 12% D 10.2%
Yo=Ro+CR
Yo=10%+2%
12%
DCF can measure the worth of ___ income stream
any
The symbol Ye represents: A Overall cap rate B Equity Yield Rate C Mortgage Constant D Building cap rate
B
The following are ____ cap techniques:
- derivation from comp sales
- band of investment with land improvement
- band of investment with mortgage equity
- NOI ratio method
- debt coverage ratio
direct
_____ capitalization, requires and specifies the following components
- projection period
- initial projected net income
- income pattern and change over the projection period
- property value change over projection period
- expected profit or yield
Yield
Relationship between dollars of tax and dollars of market value
effective tax rate
If the current level of assessment is 75% and nominal tax rate is 8% what is the effective tax rate
E=AT
.75*.08=.06
6%
Effective tax rate formula
Effective Tax rate= Assessment Rate* Nominal Tax rate
E=AT
The % of profit from a real estate investment is
Yield rate
If a property with a 9% yield rate is expected to produce 10,000 in net income in perpetuity and its market value remains unchanged, what is the overall property cap rate?
9%
Formula for a property expected to produce level net income but value is forecast to change 20% over the projection period? A Ro=Yo-CR B Ro=Yo-change(1/n) C Ro=Yo-change(SFF) D Ro=Yo-change (K factor)
C
If property value and net income are forecast to change exponentially at a constant ratio, which model should be used? A Ro=Yo-CR B Ro=Yo-change(1/n) C Ro=Yo-change(SFF) D Ro=Yo-change (K factor)
A
If the income and value are expected to change on a straight line basis at a constant amount, which model should be used? A Ro=Yo-CR B Ro=Yo-change(1/n) C Ro=Yo-change(SFF) D Ro=Yo-change (K factor)
B
If income is expected to change exponentially at a different rate than the property value, the ____ can effectively be used to convert the income to a stabilized level equivalent
K factor
The ___ residual technique assumes the ___ value is known and the building value is unknown
building, land
The property model Ro=Y-CR is used when ___and ___ are expected to change exponentially (constant ratio).
income, value
When using the exponential constant ratio model where Yo=9%, CR=4%, and ETR=2%, what is the tax loaded overall cap rate?
7%
Which technique can be used to value any income pattern?
DCF
Formula if No change in value or income
R=Y
Straight line change
R=Y-change(1/n)
Exponential change formula
R=Y-CR
