N10 Income Appraisal & Environmental Issues Flashcards
The process of converting income to value.
Capitalization
The period of time over which a property will produce income and be economically beneficial to the owner.
Economic Life
The formula for calculating the net income is:
Gross Income
- Operating Expenses
_______________
= Net Income
The rate of return that an investor desires and by which net income is converted to value is the ______.
Capitalization Rate (Cap Rate)
The cap rate is a reflection of an investment’s _____.
Risk
The memory circle formula for the income approach to value is:
Net Income
_______________ or Net Income ÷ (Value * Cap Rate)
(Value) * (Cap Rate)
Using the I =RV formula: Value =
I = Net Income V= Value R = Cap Rate I = RV is equal to Net Income= Cap Rate* Value V = I/R thus Value = Net Income/Cap Rate
Using the I =RV formula: Cap Rate =
I = Net Income V= Value R = Cap Rate I = RV is equal to Net Income= Cap Rate* Value R= I/V is equal to Cap Rate = Net Income/ Value
Using the I =RV formula: Net Income =
I = Net Income V= Value R = Cap Rate I = RV is equal to Net Income= Cap Rate* Value I = RV thus Net Income = Net Income= Cap Rate* Value
GRM stands for:
Gross Rent Multiplier
The formula for calculating value using a GRM is:
Value = Rent or Gross Income x GRM
The formula for calculating a GRM from a comparable sale is:
GRM = Sale Price (of comparable) ÷ Rent (of comparable)
Reconciliation
The process of bringing appraisal data together to arrive at a final estimate of value.
Arizona real estate agents may prepare property evaluations for a fee but may not call the evaluation an _____. However, they may call it a ______.
Appraisal, Broker Priced Opinion
The federal government agency that regulates environmental issues is the ____________________.
Environmental Protection Agency (EPA)
The Arizona state agency that regulates environmental issues is the _________________________.
Arizona Department of Environmental Quality (ADEQ)
The Arizona state agency that regulates water law is the ________________________________.
Arizona Department of Water Resources (ADWR)
The Arizona Commissioner’s Rules require ___________ of environmental problems.
Disclosure
Lead
A toxic substance found in the paint of buildings constructed prior to 1978.
Buyers and lessees of pre 1978 buildings must be given copies of _____ and a _____.
Reports, Lead Paint Booklet
Buyers of pre 1978 buildings must be given the right to ______ the property prior to becoming _________ under the _________ contract.
Inspect, Obligated, purchase
A naturally occurring gas that is known to cause lung cancer.
Radon
A fiber that can cause respiratory diseases.
Asbestos
Asbestos in buildings is dangerous when it becomes _______.
Friable (easily crumbled)
Encapsulation
The most common method of abating asbestos.
______ is often caused by Excess Moisture in buildings.
Mold
__________ can allow mold to thrive.
Airtight Windows
The general process of investigating a property to determine is hazardous substances exist is _____ aka ________.
Discovery aka Due Diligence
The process of inspecting a property, reviewing public records and interviewing former owners and tenants to determine if contamination exists is a ____________.
Phase 1 Assessment
Phase II Assessment.
The process of taking and analyzing soil samples to determine if contamination exists.
Comprehensive Environmental Response, Compensation & Liability Act abbreviated as ______.
CERCLA
CERCLA created _________.
Super Funds
Water Quality Assurance Revolving Fund or ______.
WQARF
All ______ and _____ owners may be liable for environmental cleanup. This is called _____ liability.
Current and Former, Strict
The flat portion of land located along rivers and streams that is often subject to flooding is a _______.
Floodplain
The federal agency that has created floodplain maps .
FEMA Federal Emergency Management Agency
Wetland
Land areas where ground water is at or near the surface so as to produce a watery plant community.
In Arizona, the _____ is required to have a septic tank or other on-site waste water facility inspected within __ Months of transferring a property.
Seller, 6 months
The ____ of the property must complete the waste water facility “Notice of Transfer” within __ days of purchase.
Buyer, 15 Days
