N10 Income Appraisal & Environmental Issues

Question 1

The process of converting income to value.

Answer 1

Capitalization

Question 2

The period of time over which a property will produce income and be economically beneficial to the owner.

Answer 2

Economic Life

Question 3

The formula for calculating the net income is:

Answer 3

Gross Income
- Operating Expenses
_______________
= Net Income

Question 4

The rate of return that an investor desires and by which net income is converted to value is the ______.

Answer 4

Capitalization Rate (Cap Rate)

Question 5

The cap rate is a reflection of an investment’s _____.

Answer 5

Risk

Question 6

The memory circle formula for the income approach to value is:

Answer 6

Net Income
_______________ or Net Income ÷ (Value * Cap Rate)
(Value) * (Cap Rate)

Question 7

Using the I =RV formula: Value =

Answer 7

I = Net Income V= Value R = Cap Rate
I = RV is equal to Net Income= Cap Rate* Value
V = I/R  thus  Value = Net Income/Cap Rate

Question 8

Using the I =RV formula: Cap Rate =

Answer 8

I = Net Income V= Value R = Cap Rate
I = RV is equal to Net Income= Cap Rate* Value
R= I/V is equal to Cap Rate = Net Income/ Value

Question 9

Using the I =RV formula: Net Income =

Answer 9

I = Net Income V= Value R = Cap Rate
I = RV is equal to Net Income= Cap Rate* Value
I = RV  thus  Net Income = Net Income= Cap Rate* Value

Question 10

GRM stands for:

Answer 10

Gross Rent Multiplier

Question 11

The formula for calculating value using a GRM is:

Answer 11

Value = Rent or Gross Income x GRM

Question 12

The formula for calculating a GRM from a comparable sale is:

Answer 12

GRM = Sale Price (of comparable) ÷ Rent (of comparable)

Question 13

Reconciliation

Answer 13

The process of bringing appraisal data together to arrive at a final estimate of value.

Question 14

Arizona real estate agents may prepare property evaluations for a fee but may not call the evaluation an _____. However, they may call it a ______.

Answer 14

Appraisal, Broker Priced Opinion

Question 15

The federal government agency that regulates environmental issues is the ____________________.

Answer 15

Environmental Protection Agency (EPA)

Question 16

The Arizona state agency that regulates environmental issues is the _________________________.

Answer 16

Arizona Department of Environmental Quality (ADEQ)

Question 17

The Arizona state agency that regulates water law is the ________________________________.

Answer 17

Arizona Department of Water Resources (ADWR)

Question 18

The Arizona Commissioner’s Rules require ___________ of environmental problems.

Answer 18

Disclosure

Question 19

Lead

Answer 19

A toxic substance found in the paint of buildings constructed prior to 1978.

Question 20

Buyers and lessees of pre 1978 buildings must be given copies of _____ and a _____.

Answer 20

Reports, Lead Paint Booklet

Question 21

Buyers of pre 1978 buildings must be given the right to ______ the property prior to becoming _________ under the _________ contract.

Answer 21

Inspect, Obligated, purchase

Question 22

A naturally occurring gas that is known to cause lung cancer.

Answer 22

Radon

Question 23

A fiber that can cause respiratory diseases.

Answer 23

Asbestos

Question 24

Asbestos in buildings is dangerous when it becomes _______.

Answer 24

Friable (easily crumbled)

Question 25

Encapsulation

Answer 25

The most common method of abating asbestos.

Question 26

______ is often caused by Excess Moisture in buildings.

Answer 26

Mold

Question 27

__________ can allow mold to thrive.

Answer 27

Airtight Windows

Question 28

The general process of investigating a property to determine is hazardous substances exist is _____ aka ________.

Answer 28

Discovery aka Due Diligence

Question 29

The process of inspecting a property, reviewing public records and interviewing former owners and tenants to determine if contamination exists is a ____________.

Answer 29

Phase 1 Assessment

Question 30

Phase II Assessment.

Answer 30

The process of taking and analyzing soil samples to determine if contamination exists.

Question 31

Comprehensive Environmental Response, Compensation & Liability Act abbreviated as ______.

Answer 31

CERCLA

Question 32

CERCLA created _________.

Answer 32

Super Funds

Question 33

Water Quality Assurance Revolving Fund or ______.

Answer 33

WQARF

Question 34

All ______ and _____ owners may be liable for environmental cleanup. This is called _____ liability.

Answer 34

Current and Former, Strict

Question 35

The flat portion of land located along rivers and streams that is often subject to flooding is a _______.

Answer 35

Floodplain

Question 36

The federal agency that has created floodplain maps .

Answer 36

FEMA Federal Emergency Management Agency

Question 37

Wetland

Answer 37

Land areas where ground water is at or near the surface so as to produce a watery plant community.

Question 38

In Arizona, the _____ is required to have a septic tank or other on-site waste water facility inspected within __ Months of transferring a property.

Answer 38

Seller, 6 months

Question 39

The ____ of the property must complete the waste water facility “Notice of Transfer” within __ days of purchase.

Answer 39

Buyer, 15 Days