Appraisal-Income Approach Flashcards Preview

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Flashcards in Appraisal-Income Approach Deck (18):
1

Discounting

Converting rents and other future benefits at a specified yield rate

2

Value

NOI/Rate V=I/R

3

Apartment

Emphasis on income approach

4

Operating Expenses

variable and fixed

5

Reserve allowance

short-lived items only: roofs, HVAC, water heaters, parking lots

6

OER

cash flow analysis
Operating Expenses/EGI

7

Long Live Items

Kitchen Cabinet

8

Overage Rent

When a tenant pays a base rent plus percentage of sale, the additional amount is known as overage rent

9

Not true ABOUT Cap Rate

is utilized to estimate the value of an unstable income stream

it Must be STABILIZED

10

Disadvantage of GRM

data is not available

11

Rate

Ratio of NOI to value

12

Mineral rights

partial interest

13

Expenses

Fixed Expenses +
Variable Expenses +
Replacement Reserve

14

Direct Capitalization

Annual Income - Annual Expenses/ Cap Rate

15

NIR

NOI/EGI

16

Direct Capitalization (market value)

1. abnormally high vacancy & collection losses
2. 100% occupancy
3. debt service and depreciation
CANNOT used an INVESTOR-CHOSEN cap rate (investment value)

17

Net rest loss
(due to incurable functional obsolescence)

Net Rent Loss/Building Cap Rate (Functional obsolescence is for the whole building)

18

Rate to Mortgage

Debt Portion (0.75%) x Mortgage constant (0.1127)