Ch 18 Income Capitalization Approach

Question 1

Describe the Chart for developing Income Estimates

Answer 1

Potential Gross Income
      Scheduled Rent
      Other Income
      Rent for vacant space
-  Vacancy & Collection Loss
= Effective Gross Income (EGI)
-  Operating Expenses
= Net Operating Income (NOI)
-  Debt Service (DS)
= Pre- Tax Cash Flow
-  Ordinary Income Tax
= After- Tax Cash Flow

Question 2

Are income taxes operating expenses?

Answer 2

NO

Question 3

Are property taxes operating expenses?

Answer 3

Yes

Question 4

What are some of the ways to derive capitalization Rates?

Answer 4

1. Comparable Sales
2. Band of Investment
3. Debt Coverage Formula
4. Investor Surveys

Question 5

What does IRV stand for?

Answer 5

Income (NOI) = Value * Rate

Question 6

IRV fits under which of the 4 listed ways to derive capitalization rates?

Answer 6

Comparable Sales

Question 7

Who is Kevin Swenson?

Answer 7

The CEO of Re-link

Question 8

Who is the CEO of Re-link?

Answer 8

Kevin Swenson