analyzing data

Question 1

PGI (potential gross income) = _____________________ + _____________________

Answer 1

(Total Rental Income) + (Other Income).

Question 2

= GPI (gross potential income) - Vacancy & Credit Losses + Other Income

Answer 2

effective gross income

Question 3

what is the formula for finding net operating income

Answer 3

NOI = (effective gross income) - (Operating Expenses)

Question 4

V = I / R: represents the capitalization formula where:

Answer 4

V: is the property’s value
I: is the Net Operating Income
R: is the capitalization rate

Question 5

How is net operating income used in an income-based approach to appraisal?

Answer 5

NOI is divided by potential gross income to find a capitalization rate.

Question 6

While a ___________ considers all income streams, it’s more suitable for multifamily properties or commercial buildings with diverse income sources. For a single-family home purchased as a rental property, a _______________ is more appropriate as it focuses solely on rental income.

Answer 6

GIM, GRM

Question 7

Operating expenses ÷ effective gross income is used for what

Answer 7

Operating Expense Ratio
Used to determine if the level of operating expenses is typical for the property type

Question 8

Net operating income ÷ effective gross income is used for what

Answer 8

Net Income Ratio
Compares NOI with effective gross income to evaluate property efficiency

Question 9

(Operating expenses + debt service) ÷ effective gross income is used for what

Answer 9

Breakeven Ratio
Used to estimate the occupancy rate the property must meet in order to make a profit

Question 10

Which two operating statement ratios will equal one when added together?

Answer 10

Operating expense ratio and net income ratio

Question 11

When an appraiser is using an income approach, what will be listed on both the accountant’s operating statement and the appraiser’s statement?

Answer 11

Real estate tax

Question 12

How is The Gross Rent Multiplier is calculated

Answer 12

by dividing the sale price by the gross monthly rent.
(Sales price ÷ monthly gross rent = gross rent multiplier)

Question 13

how is The Gross Income Multiplier calculated

Answer 13

divides the sale price by the gross annual income; rent and any additional income produced by the property such as laundry or vending services
(Sales price ÷ annual gross income = gross income multiplier)

Question 14

When you apply the multiplier to your subject property for GIM, should you use its potential gross income or effective gross income?

Answer 14

Effective gross income because that is the variable used when calculating GIM for your comparables

Question 15

Using this common method of reconciliation, an appraiser assigns specific percentages to each approach to value used to arrive at a final estimate of value. This is known as reconciling appraisal values through ______.

Answer 15

A weighted average

Question 16

Both types of appraisal reports can be completed in either a narrative format or form. Match the property type to the format most often used.

1. Commercial property
   Form Report
   Narrative Report
2. Residential property
   Form Report
   Narrative Report

Answer 16

1. narrative
2. form

Question 17

Form and Narritive appraisal reports are both forms of ______________. while ________ is using appraisal software and ____________ is developed as a word-processed document.

Answer 17

restrictive appraisal report
form
and narrative

Question 18

the order of information in a appraisal report is what

Answer 18

First: Cover letter

Second: Certificate of appraisal

Third: Overview and summary

Fourth: Introduction

Fifth: Factual data

Sixth: Analysis and opinions

Seventh: value conclusions

Eighth: addenda

Question 19

Which type of appraisal report makes use of pre-printed documents?

Answer 19

form report

Question 20

In which section of the report would the appraiser include the subject property’s history, and its recent sales and listings?

Answer 20

intro

Question 21

Which type of appraisal report is lengthy and often used for complex properties?

Answer 21

narrative
The narrative report is a lengthy formal report often used for complex properties. It includes a detailed discussion of the methods used, the steps taken, and the analyses used to interpret the data collected.