Flashcards in Basic Questions to know Deck (4)
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1
Q
For example, if a building is priced at $1,000,000, and it generates $100,000 in net revenue, its capitalization, or ‘cap rate’ would be what?
A
10%
Cap rate = NOI/Market price
NOI=$100,000
Market Price= $1,000,000
2
Q
Which approach is used where the property is difficult to categorize or there are no similar properties to compare to?
1) Cost Approach
2) Direct Comparison
3) Income Approach
A
Cost Approach
3
Q
What is basically COST APPROACH
A
You basically find the cost of to BUILD or REPLACE the Building from the ground up.
4
Q
What is another name for INCOME APPROACH
A
Capitalization Approach
