valuation

Question 1

what is a yield

Answer 1

a simple way of expressing the ROI of a real estate investment. Usually expressed as a percentage.

Question 2

what is the equation for ARY (all risks yield)

Answer 2

ARY = Net Income / Capital Value

Question 3

what is a Reversionary Yield

Answer 3

Estimated yield once the rent reaches market level (e.g., after rent review).

Question 4

what does a low risk often mean

Answer 4

Lower income, but lower risk
If a property is safe and stable, investors are happy to accept a lower return because there’s less chance of something going wrong.

Question 5

what does a high yield often mean

Answer 5

a high yield often means higher income but higher risk
If a property is risky, buyers won’t want it unless it offers a higher return — so the yield must go up to attract interest.

Question 6

what is the difference in risks associated with yield

Answer 6

The safer the property, the less return you need to feel confident.
The riskier the property, the more return you demand to justify the risk.

Question 7

does a reversion into perpetuity use market rent or rent passing

Answer 7

market rent

Question 8

does a valuation of term of years use market rent or rent passing

Answer 8

rent passing

Question 9

when undertaking a valuation of term of years, do you + or - 1% from the yield

Answer 9

-1%

Question 10

during the hardcore method of valuation, do you + or - 1% to the yield when working out the uplift at review

Answer 10

+1%