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IAAO > RES > Flashcards

RES Flashcards

1
Q 
CAPITALIZATION IS THE PROCESS USED TO:
ESTABLISH REPRODUCTION COST
ESTABLISH MORTGAGE PAYMENTS
ESTABLISH A DEPRECIATION SCHEDULE
CONVERT INCOME INTO AN ESTIMATE OF VALUE
A

CONVERT INCOME INTO AN ESTIMATE OF VALUE

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2
Q 
THE UNDERLYING PRINCIPLE PROVIDING THE BASIS OF THE INCOME CAPITALIZATION APPROACH IS:
CHANGE
BALANCE
CONFORMITY
ANTICIPATION
A

ANTICIPATION

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3
Q 
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
.1
1.11
.08
A

1.11

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4
Q 
A GIM IS OBTAINED BY DIVIDING THE:
SALE PRICE BY ANNUAL INCOME
SALE PRICE BY MONTHLY INCOME
OVERALL CAP RATE BY SALE PRICE
ANNUAL INCOME BY SALE PRICE
A

SALE PRICE BY ANNUAL INCOME

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5
Q 
If the land to building ratio had been used to establish land value, what valuation method would this have been?
abstraction
allocation
comparable sales
comparative unit
A

allocation

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6
Q 
What type of cost is typically preferred by appraisers?
reproduction cost
replacement cost
historical cost
trended original cost
A

replacement cost

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7
Q 
What is the formula for using the age-life method to calculate the economic life of a property?
remaining econ life - eff age
remaining econ life - actual age
remaining econ life + eff age
remaining econ life + actualage
A

economic life=remaining economic life+EFF age

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8
Q 
All three approaches to value are based upon what economic principle?
change
conformity
anticipation
substitution
A

substitution

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9
Q

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 considered
determine the cost to cure
already recognized by the economic obsolescence
none of the above

A

determine the cost to cure

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10
Q 
What economic principle states that land and improvements must be valued on the same use?
consistent use
competitive use
demand
conformity
A

consistent use

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11
Q

The basic equation used in the income approach is

A

income divided by rate equals value

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12
Q

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

A

leasehold income

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13
Q

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

A

effective gross income

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14
Q

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?

A

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

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15
Q

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

A

44% (205/500*.94)

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16
Q

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

A

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

17
Q

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

A

1.11

18
Q

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?

A

.103

19
Q

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

A

8%

20
Q 
Which of the following is not neeed for band of investment method?
reversion
loan to value ratio
rate for equity
rate for debt
A

reversion

21
Q

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

A

effective tax rate

22
Q

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

A

net income ratio

23
Q 
mortgage cap rate Rm is the percentage of the original loan that is required to be paid
monthly
annually
quarterly
by the lender
A

annually

24
Q

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

A

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

25
Q

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?

A

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

26
Q

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

A

Ro+CR=Yo .13

27
Q

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

A

Ro=DCRxRmxM

13.8

28
Q

GIM is what divided by what

A

sale price divided by annual income

29
Q

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

A

8%

30
Q

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

A

yield capitalizatiion

31
Q

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?

A

I R V
B-250k .125 2000000
L-100k .10 1000000
T- 350k

3000000

32
Q

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

A

recapture

IAAO (3 decks)

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