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RICS APC Valuation Pathway > Valuation > Flashcards

Valuation Flashcards

1
Q

What is an internal valuer?

A

Employed by company to value internal assets, no third party reliance

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2
Q

What is an external valuer?

A

Has no material links with the asset to be valued

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3
Q

What are the three steps to undertake prior to commencing with a valuation instruction?

A

Competence
Independence
Terms of Engagement

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4
Q

Why is due diligence undertaken?

A

To check there are no material matters which could impact upon the valuation

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5
Q

What are some statutory due diligence checks?

A 
Business rates
Contamination
EPC
Flooding
Legal Title and Tenure
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6
Q

What are the six steps when undertaking the comparative method?

A 
Search
Verify
Schedule
Hierarchy
Analyse
Report
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7
Q

When would you use the investment method of valuation?

A

When there is an income stream to value

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8
Q

What is a yield?

A

A measure of investment return, expressed as a percentage of capital invested

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9
Q

How do you calculate a yield?

A

Income / Price x 100

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10
Q

What are prime yields in Cornwall for industrial units?

A

6.5% - 8% NIY

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11
Q

How do you calculate a Years Purchase?

A

100 / Yield

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12
Q

What is a years purchase?

A

Number of years required for its income to repay its purchase price

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13
Q

What are some key risks that should be considered when arriving at a yield?

A 
Quality of covenant
Lease terms
Voids
Security
Use of property
Market sentiment
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14
Q

What is an all risks yield?

A

Yield which reflects all the prospects and risks attached to a particular investment

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15
Q

What is a true yield?

A

Assumes rent is paid in advance, not in arrears

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16
Q

What is a nominal yield?

A

Assumes rent is paid in arrears

17
Q

What is a gross yield?

A

Not adjusted for purchasers costs

18
Q

What is a net initial yield?

A

Adjusted for purchasers costs

19
Q

What is an initial yield?

A

Income yield for current income and current price

20
Q

What is a reversionary yield?

A

MR / current price

21
Q

What is a running yield?

A

Yield at one moment in time

22
Q

What does a DCF valuation assume?

A

Growth implicit

23
Q

Explain the methodology behind a profits valuation?

A 
Turnover 
- Costs 
= Gross profit
- reasonable working expenses
=unadjusted net profit
- operators remuneration
= FMOP

Capitalised at yield to achieve MV.

RICS APC Valuation Pathway (21 decks)

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