Section 1 Fundamentals Flashcards
0
Q
Littoral
A
Water rights non flowing
1
Q
Riparian
A
Flowing water rights
2
Q
Area of a circle
A
Pi R2
3
Q
Area of an oval
A
Pi •r1•r2
4
Q
Rt
A
Terminal cap rate
5
Q
Enablements
A
annual plants & crops
6
Q
Appurtenant
A
added to the land and passes with title (easement, tree)
7
Q
Attachment
A
lien
8
Q
Entitlement
A
governmental approval
9
Q
Investment value
A
value to a lass of investor based on investment criteria
10
Q
Use value
A
value for a specific use to a specific user
11
Q
Enterprise value
A
used to be business value
12
Q
Points
A
1% of the loan
13
Q
Fair value
A
accounting term/also a term used in tax assessment
14
Q
Market area
A
area with subject and a majority of the subject’s competition
15
Q
Competitive Market area
A
area with the subject and all of its competition
16
Q
Money markets
A
market trading short term money instruments < one year
17
Q
Capital markets
A
market trading long term money instruments > one year
18
Q
Hypothetical condition
A
known to be false
19
Q
Extraordinary assumption
A
uncertain information assumed to be correct
20
Q
Stabilized occupancy
A
level of occupancy for a specific property or class of property when it is capturing its appropriate share of demand
21
Q
Transitional vacancy
A
vacancy temporarily different than a new level of stabilized vacancy
22
Q
market vacancy
A
actual vacancy for a property type
23
Q
frictional vacancy
A
the typical minimum vacancy needed for the market to function
24
GBA
gross building area measured from the outside of the exterior walls (condos interior walls)
25
GLA Gross Living Area
gross living area - finished and heated space above grade for single & multi unit residential- exterior dimentions (condos interior).
26
GLA Gross Leasable Area
shopping centers - exterior walls, half of demising walls
27
NRA Net Rentable Area
space on which tenants pay rent - gross building area less vertical floor penetrations (includes common areas)
28
Io (1)
NOI
29
Ro (2)
going in cap rate, initial cap rate
30
Vo (2)
PV, value of overall property
31
Ie (4)
Income to equity, pre tax cash flow, equity dividend, cash on cash
32
Re (5)
Rate to equity, equity cap rate, equity dividend rate, cash on cash rate, cash flow rate
33
Ve (1)
down payment
34
Im (3)
income to mortgage, annual debt service, annual loan payment
35
Rm (4)
Mortgage constant, rate to mortgage, loan constant, mortgage cap rate, loan amortization factor
36
Vm (4)
value of the mortgage, loan balance, unpaid loan principal, amount borrowed at the beginning of the loan
37
I t (3)
Terminal income, exit income, reversionary income
38
Rt (3)
terminal cap rate, exit rate, going out rate
39
Vt (5)
terminal value, reversion, resale, future value, FV, exit value
40
3 kinds of change
total, compounded, straight line
41
Total change (4)
level, stable, fixed, constant
42
Straight line change (2)
constant amount, straight line (+50, -10)
43
Compounded change (5)
exponential, percentage, constant ratio, compounded, percentage
44
Return of
recapture, recovery
45
Yield rate (3)
discount rate, return on and IRR
46
Percentage (2)
Ratio, proportion
47
Model (2)
formula, relationship
48
Holding period (2)
ownership period, projection period
49
M
LTV loan to value ratio, mortgage ratio
50
Yo
return on the whole investment over the holding period
51
Ye
return on the equity investment over the holding period
52
Ym
percentage return on the mortgage - interest rate when there are no points/costs
53
Four forces that influence value
GEES government, enviornmental, economic, social
54
Four factors to create value
DUES demand, utility, effective purchasing power, scarcity
55
Four agents of production
CELL Capital, Entreprenurial coordination, land and labor
56
Four powers of government
PETE Police, Eminent domain, taxation, escheat
57
Escheat
right to take title when someone dies w/o a will
58
Four stages of a neighborhood
GSDR growth stability, decline revitalization
59
Four test of H & B Use
PLFM - physically possible, legally permissible, financially feasible, maximally productive
60
Four components of a market cycle
ECRR - expansion, contraction, recession, recovery
61
15 Economic Principles - Anticipation
value is created by expected future benefits
62
15 Economic Principles - Change
the result of the dynamic interaction of the 4 forces that create value (GEES)
63
15 Economic Principles - Supply & Demand
quantity of goods, products & services and the amount desired by consumers
64
15 Economic Principles - Substitution
buyer will pay no more than the cost to acquire an equally desireable alternative assuming no undue delay
65
15 Economic Principles - Balance
value is maximized when the 4 agents of production (CELL) are brought together in the propert proportions
66
15 Economic Principles - Competition
interaction of market participants
67
15 Economic Principles - Contribution
the amount a component adds to a larger property or value loss if its missing
68
15 Economic Principles - Conformity
value is maximized when the property conforms to the demands of the market
69
15 Economic Principles - Surplus productivity
net income remaining after the agents of production have been paid (CELL)
70
15 Economic Principles - Law of Decreasing Returns
additional expenditures beyond a certain point will not yield a return commensurate with the additional investment
71
15 Economic Principles - Externalities
factors outside a property can have positive or negative effects on value
72
15 Economic Principles - Progression
value of an inferior property can be enhanced by better properties nearby
73
15 Economic Principles - Regression
value of a superior property can be degraded by inferior properties nearby
74
15 Economic Principles - Opportunity Cost
the cost of an option not chosen
75
15 Economic Principles - Consistent Use
improvements must be valued in a fashion that is consistent with the highest and best use of the underlying land
76
5 tools used by the Fed to Influence the Economy
control money supply, open market policy (buy sell bonds), set the discount rate, set the federal funds rate, setting the reserve requirement (regulationT).
77
Risk
the probability a foreseen event will not occur
78
Financial risk
the risk associated with debt, risk of foreclosure
79
market risk
risk that shifts in supply or demand will degrade value
80
capital market risk
risk that the avalaiblity of capital will impair value
81
Value converters
cap rates and yield rates increase with more risk, multiplers decrease
82
sensitivity analysis
how much one dependent variable changes the answer
83
scenario analysis
a study of 3 outcomes that would occur by changing more than one variable - pessimistic, most likely and optomistic
84
Mile (3)
5,280 l.f., 320 rods, 80 chains
85
Rod
16.5 feet
86
Chain
66 feet 0.1 furlong
87
Furlong
660 feet
88
Metes & Bounds
point of beginning, boundaries, meets back at the end
89
Rectangular Survey System
(public land survey system) each block is a 640 acre Township, 6 miles by 6 miles, 36 one square mile blocks
90
Township
1 square mile block, 36 square miles, 640 acres
91
Range
stacked vertical townships numbered east and west of the principal meridian
92
Principal Meridian
lines that run north and south to separate townships
93
Base Lines
lines that run east and west to separate townships
94
Lot and block system
a subsystem of the rectangular survey system
95
Ownership in severalty
sole ownership (person, REIT, corp, partners)
96
Co-ownership
ownership held by 2 or more parties or entitites
97
Tenants in common
(co-ownership) with undivided fractional interest, passes on death in accordance with will
98
Joint tenants
(co-ownership) interest passes to other owner on death of one
99
Tenancy by the Entirety
(co-ownership) for married couples with equal undivided interest w/ right of survivorship
