13 Ch8 Operating Income Statement and Agency Guidelines for 2-4 Unit Properties quiz - Sheet1

Question 1

When converting income into an indication of value, with net income we ________ , and with gross income we __________ .

Answer 1

divide by a rate, multiply by a multiplier

Question 2

Net Operating Income is equal to _________ minus ___________.

Answer 2

Effective Gross Income, operating expenses

Question 3

“Income from the operation of a business or the management of property, customarily stated on an annual basis” is the definition of __________ income.

Answer 3

Gross

Question 4

“The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted” is the definition of ___________income.

Answer 4

Potential gross

Question 5

“The anticipated income from all operations of the real property after an allowance is made for vacancy and collection losses” is the definition of

Answer 5

Effective Gross Income

Question 6

When completing a Form 216 Operating Income Statement, how should we treat any income from owner-occupied units?

Answer 6

exclude it

Question 7

When a 2-unit property is being appraised, when does FHA require the income approach to be developed?

Answer 7

When the market contains sufficient data for the approach to be relevant

Question 8

Which of the following are known as government sponsored enterprises?

Answer 8

Fannie Mae and Freddie Mac

Question 9

FHA says that a two- to four-unit dwelling with an accessory unit is

Answer 9

ineligible

Question 10

FHA states that when a 2-4 unit property is being appraised, the appraiser must report the results using which report form?

Answer 10

1025

Question 11

Which of the following are government agencies?

Answer 11

FHA and VA

Question 12

“Total income from a property before deducting any expenses, customarily stated on an annual basis” is the definition of _______________ income.

Answer 12

Gross

Question 13

“Income derived from the operation of a business or real property; indicates a stage in the profit-and-loss account where all direct costs and income from the operation have been taken into account; as distinguished from net profit or cash flow” is also known as:

Answer 13

operating income

Question 14

“The actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted” is the definition of ________________ .

Answer 14

Net Operating Income

Question 15

What will generally be dictated by supply and demand characteristics of the local rental market?

Answer 15

vacancy allowance

Question 16

A furnace costs $3,400 to replace, and is expected to last 20 years. What would be the appropriate charge for reserves for replacement for this item?

Answer 16

170. $3,400 ÷ 20 = $170.

Question 17

When you subtract the allowance for vacancy and credit loss the end result is:

Answer 17

effective gross income

Question 18

By definition, which indicator takes into account income from other sources in a rental property including coin operated washers and dryers?

Answer 18

effective gross income

Question 19

The standard income capitalization valuation formula is

Answer 19

V = I ÷ R

Question 20

“Total income from a property before deducting any expenses, customarily stated on an annual basis” is the definition of _______________ income.

Answer 20

Gross

Question 21

An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the buildings economic life is known as:

Answer 21

replacement allowance

Question 22

Which of the following are management expenses?

Answer 22

setting up reserves for replacement, paying bills, advertising and marketing of vacant spaced

Question 23

“The sum of all fixed and variable operating expenses and the replacement allowance cited in the appraiser’s operating expense estimate” is the definition of ______________ expenses.

Answer 23

total operating

Question 24

Income divided by rate equals

Answer 24

value

Question 25

What will generally be dictated by supply and demand characteristics of the local rental market?

Answer 25

vacancy allowance

Question 26

“The periodic expenditures necessary to maintain the real estate and continue production of the Effective Gross Income, assuming prudent and competent management” is the definition of ______________.

Answer 26

operating expenses