Exam (elaborations)
REE 4103 FSU FINAL.
Exam of 16 pages for the course REE 4103 at REE 4103 (REE 4103 FSU FINAL.)
[Show more]
Content preview
REE 4103 FSU FINAL*Comparable Sale A was recently sold for $700,000. Assume the PGI of the property is
$300,000 and its effective gross income is $220,000. The operating expense ratio of the
property is 75%. What is the overall capitalization rate extracted from the effective gross
income multiplier of Sale A?* - ANS-7.86%
*If the Net Operating Income for the subject property is determined to be $45,000/year.
The Net Operating Income and the Value of the property are expected to grow at 5%
each year. The Discount rate is determined to be 12% what is the indicated value of the
property.* - ANS-$642,857.14
A _______________ would have the lowest ratio of operating expenses to gross
income incurred by the landlord. - ANS-
A demonstration narrative appraisal report: - ANS-
A forecast using discounted cash flow analysis would include: - ANS-
A formal appraisal report must include the: - ANS-
A gross lease is one that: - ANS-Landlord pays for all operating expenses
A gross rent multiplier is valid when the subject and comparable properties have similar:
- ANS-
A lease clause that limits the expenses of the landlord is termed a: - ANS-
A lease on a 8,000 square foot industrial building, where the rent is specified as
$3,500/month, for a 5-year term with level income throughout the lease term. When the
lease was negotiated, the tenant received free rent for the first month of each year as a
concession. What is the effective rent per square foot per year? - ANS-$4.81
Solve by: 3,500*11 = 38500/8000 = 4.81
A lease which provides for rental changes annually tied to the consumer price index is
what kind of lease? - ANS-Index Lease
,A lease which requires the landlord and tenant to arbitrate the amount of the lease upon
the tenant exercising a lease extension option is what type of lease? -
ANS-Reevaluation Lease
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3:
$14,000 Year 4: $16,000; would be called what type of lease? - ANS-
A property forecasted to produce $55,000 of gross income, and which sells for
$475,000 is said to have sold at a GIM of? - ANS-8.64
Solve by: V = I * IM
475,000 = 55,000 * IM
A property has potential gross income of $30,000, effective gross income of $27,000,
and operating expenses of $8,100. What is the operating expense ratio? - ANS-30%
Solve by:
EGI / OE
A property sold for $555,000. The buyer anticipated the potential gross income would
be $93,000, the vacancy would be 5%, and expenses would be 53% of EGI in the year
after the purchase. What is the overall capitalization rate (RO)? - ANS-7.48%
Formulas:
PGI - V&C = EGI - OE = NOI
Value = NOI / Ro
Solve by:
93000 - (93000*.05)
= 88350 - (88350*.53)
= 41524.
= 7.48%
A reconstructed operating statement for an owner operated property should include: -
ANS-• Vacancy and Collection Loss
• Effective Gross Income
• Operating Expenses
• Fixed Expenses
• Variable Expenses
• Replacement Allowance
• Total Operating Expenses
• Net Operating Income
• Additional Calculations
• Mortgage debt service, Equity Dividend, Expense & Income Ratios
, A rent multiplier: - ANS-
A rent survey reveals that apartment buildings offering one-bedroom units have a
considerably higher occupancy factor than those with two-bedroom units. If the subject
property includes only units with two bedrooms, the appraisal should probably project: -
ANS-A higher vacancy factor than was found for one bedroom units
A revaluation lease - ANS-provides for periodic rent adjustments based on the market
rental rate of the space
A small office building sold for $120,000. The monthly net operating income is $1,300
per MONTH. What was the overall capitalization rate? - ANS-13 percent
Solve by:
(1300*12) / 120000
A technique of income capitalization in which the analyst need not distinguish interest
rates from capital recovery rates, but is most useful for comparable income properties: -
ANS-Direct Capitalization
A tenant who has an Exclusive Use Clause with a landlord, where the landlord later
allows a competing tenant in the same shopping center may: - ANS-Exerciser the
clause in a lawsuit
A transmittal letter does not include: - ANS-
A value range is never: - ANS-wide or narrow
All are used in valuation of income-producing property except:
Rental rates
Operating expenses
Income taxes
Net leasable area - ANS-Income taxes
All of the following lease provisions are advantageous to the lessee except -
ANS-Escalation Clause
All of the following relate to the rent level or payment schedule of a lease except: - ANS-
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller topgradesdr. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.57. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72042 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now