Exam (elaborations)
REE 4103 - Ch. 21 Highlights
REE 4103 - Ch. 21 Highlights
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REE 4103 - Ch. 21 HighlightsA total return greater than or equal to the amount invested - ANS-A prudent investor
ultimately seeks what?
Anticipation - ANS-This idea is fundamental to the income capitalization approach.
Base Rent - ANS-the minimum rent stipulated in a lease
By analyzing existing a proposed leases that apply to the subject property - ANS-How
does an appraiser begin the income capitalization approach?
Contract rent - ANS-the actual rental income specified in a lease
Deficit rent - ANS-the amount by which market rent exceeds contract rent at the time of
the appraisal. Created by a lease favorable to the tenant and may reflect uninformed or
unusually motivated parties, inferior management, or a lease executed in a weaker
rental market
Economic rent - ANS-Market rent is also known as what?
Effective Gross Income (EGI) - ANS-The anticipated income from all operations of the
real property after an allowance is made for vacancy and collection losses and an
addition is mad for any other income
effective rent - ANS-the rental rate net of financial concessions such as periods of free
rent during the lease term and above or below market tenant improvements
Excess rent - ANS-the amount by which contract rent exceeds market rent at the time of
the appraisal. Created by a lease that is favorable to the lessor and may reflect superior
management or a lease that was negotiated in a stronger rental market
Fixed Expenses - ANS-operating expenses that generally do not vary with occupancy
and have to be paid whether the property is occupied or vacant
Flat rental lease - ANS-a leases with a specified level of rent that continues throughout
the lease term
Gross lease - ANS-tenant pays rent and landlord pays expenses
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