deck_3168775 (1)

Question 1

CAPITALIZATION IS THE PROCESS USED TO:ESTABLISH REPRODUCTION COSTESTABLISH MORTGAGE PAYMENTSESTABLISH A DEPRECIATION SCHEDULECONVERT INCOME INTO AN ESTIMATE OF VALUE

Answer 1

CONVERT INCOME INTO AN ESTIMATE OF VALUE

Question 2

THE UNDERLYING PRINCIPLE PROVIDING THE BASIS OF THE INCOME CAPITALIZATION APPROACH IS:CHANGEBALANCECONFORMITYANTICIPATION

Answer 2

ANTICIPATION

Question 3

A PROPERTY HAS A NET OPERATING INCOME OF 10,000, INTEREST PAYMENTS OF 8000 AND PRINCIPAL PAYMENTS OF 1000. WHAT IS THE DEBT COVERAGE RATIO?.09.11.11.08

Answer 3

1.11

Question 4

A GIM IS OBTAINED BY DIVIDING THE:SALE PRICE BY ANNUAL INCOMESALE PRICE BY MONTHLY INCOMEOVERALL CAP RATE BY SALE PRICEANNUAL INCOME BY SALE PRICE

Answer 4

SALE PRICE BY ANNUAL INCOME

Question 5

If the land to building ratio had been used to establish land value, what valuation method would this have been?abstractionallocationcomparable salescomparative unit

Answer 5

allocation

Question 6

What type of cost is typically preferred by appraisers?reproduction costreplacement costhistorical costtrended original cost

Answer 6

replacement cost

Question 7

What is the formula for using the age-life method to calculate the economic life of a property?remaining econ life - eff ageremaining econ life - actual ageremaining econ life + eff ageremaining econ life + actualage

Answer 7

economic life=remaining economic life+EFF age

Question 8

All three approaches to value are based upon what economic principle?changeconformityanticipationsubstitution

Answer 8

substitution

Question 9

An interior inspection of a property shows it is suffering from extreme deferred maintenance. What would be the best way to measure this depreciation?deferred maintenance should not be considereddetermine the cost to curealready recognized by the economic obsolescencenone of the above

Answer 9

determine the cost to cure

Question 10

What economic principle states that land and improvements must be valued on the same use?consistent usecompetitive usedemandconformity

Answer 10

consistent use

Question 11

The basic equation used in the income approach is

Answer 11

income divided by rate equals value

Question 12

From tenants standpoint, when economic rent exceeds contract rent the difference is known as

Answer 12

leasehold income

Question 13

Anticipated income from all operations of the property adjusted for vacancy and collection losses, and misc income is called

Answer 13

effective gross income

Question 14

If an income property has an annual effective gross income of 64000 with total expenses of 30000 and variable expenses of 17000, what is the operating expense ratio?

Answer 14

.47 (total is 30, dont add 17) EGI/TOTAL

Question 15

apartment complex, PGI is 500000, vacancy 6%, operating expenses 205000, what is operating expense ratio

Answer 15

44% (205/500*.94)

Question 16

Office building has 30000 sq ft gross building area, 24000 sq ft rentable area. market rent 15/sq ft of net rentable area, vacancy and collection is 3% of gross potential income. Operating expenses are 32% of EGI, and the sales price was 2793600.What is PGI, EGI, NOI, Ro

Answer 16

PGI-360000EGI-349200NOI-237456Ro-.085

Question 17

A property has a NOI of 10000, interest payments of 8000 and principal payments of 1000. What is the debt coverage ratio?

Answer 17

1.11

Question 18

Building cap rate- .11, land cap rate- .09, land value as percent of total 35%What is overall cap rate by using the band of investment method?

Answer 18

.103

Question 19

An apartment house is valued at 420000 and has a net income of 2800 per month. Calc overall cap rate for the investment

Answer 19

8%

Question 20

Which of the following is not neeed for band of investment method?reversionloan to value ratiorate for equityrate for debt

Answer 20

reversion

Question 21

The rate that is the percentage that annual real estate taxes are in relation to the propertys total value is

Answer 21

effective tax rate

Question 22

The ratio of net operating income to effective gross income is called

Answer 22

net income ratio

Question 23

mortgage cap rate Rm is the percentage of the original loan that is required to be paidmonthlyannuallyquarterlyby the lender

Answer 23

annually

Question 24

PGI 1545000, vacancy 5%, operating expenses 543068, EGI multiplier 7. What is overall cap rate Ro?

Answer 24

.09 (NOI/EGI, EGI=1467750, NOI=924682) NIR/EGIM

Question 25

Typical properties are financed with 60% debt and 40% equity. Require 8% of amount borrowed to be paid annually to amortize the loan, typical equity dividend rate Re would be .11 for equity investor. What is overall cap rate Ro?

Answer 25

.092 Debt .6 .8 .048equi .4 .11 .044

Question 26

commercial property recently sold for 7000000, is expected to produce a NOI of 630000 during first year. Expected to increase in income and value 4% per year over next 5 years, what is overall yield rate Yo

Answer 26

Ro+CR=Yo .13

Question 27

Debt coverage ratio requirement from lenders is 1.5. Lenders will finance 80% of the investment and require a mortgage annual constant of 11.5%. What would be the indicated overall cap rate RO indicated for the subject

Answer 27

Ro=DCRxRmxM13.8

Question 28

GIM is what divided by what

Answer 28

sale price divided by annual income

Question 29

apartment house is valued at 420000 and has net income of 2800 per month. calc overall rate for invesement

Answer 29

8%

Question 30

The method of converting future net benefits into present value where each future net benefit is discounted at a proper yield rate (discount rate) is

Answer 30

yield capitalizatiion

Question 31

A property has a land value of 1000000, a net operating income of 350000, a land cap rate of 10%, and a bldg cap rate of 12.5%. What is the value of the subject?

Answer 31

I R VB-250k .125 2000000L-100k .10 1000000T- 350k 3000000

Question 32

in straight line capitalization ____ is received in equal amounts during the economic life of the imrovement

Answer 32

recapture