Quiz Income Approach Ch 15-16 Flashcards
(45 cards)
“A measure of central tendency identified as the middle value in an ordered array of numerical values” is the definition of
Median
“A measure of central tendency; the value of the middle item in an uneven number of items arranged or arrayed according to size or the arithmetic average of the two central items in an even number of items similarly arranged” is the definition of
Median
“The actual or anticipated net income that remains after all operating expenses are deducted from effective gross income but before mortgage debt service and book depreciation are deducted “ is the definition of
Net operating income
“The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income” is the definition of
Effective gross income
“The region or area over which something is found, is distributed, or occurs” is the definition of
Range
“The sum of a series of values divided by the number of values in the group” is the definition of
Mean
“The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted” is the definition of
Potential gross income
“Total income from a property before deducting any expenses, customarily stated on an annual basis” is the definition of
Gross income
A 4-unit property has two units rented at $900 per month, and two units rented at $1,200 per month. The vacancy and collection loss rate is 6%. Total operating expenses are $21,525. What is the EGI?
- 2 X $900 = $1,800. 2 X $1,200 = $2,400. $1,800 + $2,400 = $4,200. $4,200 X 12 = $50,400. $50,400 X .06 = $3,024. $50,400 - $3,024 = $47,376.
A 4-unit property has two units rented at $900 per month, and two units rented at $1,200 per month. The vacancy and collection loss rate is 6%. Total operating expenses are $21,525. What is the NOI?
- 2 X $900 = $1,800. 2 X $1,200 = $2,400. $1,800 + $2,400 = $4,200. $4,200 X 12 = $50,400. $50,400 X .06 = $3,024. $50,400 - $3,024 = $47,376. $47,376 - $21,525 = $25,851.
A motel has a gross annual income of $246,000 and its total operating expenses are $103,300. What is its expense ratio?
42%. $103,300 ÷ $246,000 = .42
A motel has a gross annual income of $458,000 and its total operating expenses are $201,500. What is its expense ratio?
0.44
An apartment complex has a gross annual income of $418,000 and the expense ratio is 38%. How much are the total operating expenses?
158840
Effective Gross Income - __________________ = Net Operating Income.
Operating expenses. You subtract operating expenses from EGI to arrive at NOI.
Fannie Mae form 1007 is titled
Single Family Comparable Rent Schedule
Fannie Mae Form 216 should be used when appraising
2-4 unit residential properties plus one-unit investment properties
How many comparable sales are needed to derive a reliable GRM?
At least five or six
If you are in a market area in which there are rent controls:
Don’t use the GRM approach
In actual appraisal practice, Form 216 is most commonly prepared by the:
Appraiser
In actual practice, the Operating Income Statement (Form 216) is typically prepared by:
The appraiser
In every statistical distribution there is always a _________ but there may not be a ____________.
Median, mode
In Form 216, the income and expenses have to be projected for the next ____ months.
12
In order to entice a prospective tenant to sign a lease, an apartment building owner offers one month of free rent. This would be considered
a rent concession
Lenders use _____________ income when underwriting loans for 2 to 4 unit residential properties.
Operating
