Net Operating Income - NOI - ️️Net operating income equals all revenue from the
property minus all reasonably necessary operating expenses. Aside from rent, a
property might also generate revenue from parking and service fees, like vending and
laundry machines.
Effective gross income (EGI) ...
Net Operating Income - NOI - ✔️✔️Net operating income equals all revenue from the
property minus all reasonably necessary operating expenses. Aside from rent, a
property might also generate revenue from parking and service fees, like vending and
laundry machines.
Effective gross income (EGI) definition - ✔️✔️The anticipated net income from all
operation of the real property adjusted for vacancy and collection losses. (DOESN'T
INCLUDE EXPENSES)
functional obsolescence - ✔️✔️A flaw in construction, materials or design is known as
(Income Producing) Personal Property - ✔️✔️Property not permanently attached to
real estate and other assets such as inventories, furniture, and machinery
Capitalization Rate - ✔️✔️The capitalization rate is the rate of return on a real estate
investment property based on the income that the property is expected to generate.
special use property - ✔️✔️property that is taxed on 100% of market value less any
exemptions except
Escheat - ✔️✔️Ownership passed to state if there are no heirs
Principle of Balance - ✔️✔️Holds that value is created and maintained in proportion to
balance in the four factors in production.
Ad Valorem - ✔️✔️Taxed according to value
For omitted BPP, how many years may a chief appraiser go back and add to the
appraisal roll - ✔️✔️2 proceeding years
An acre of land contains - ✔️✔️43,560 square feet
Legal Description - ✔️✔️Used to describe the physical location of real property, may be
metes and bounds, surveys, or lot and block
, What is real property according to the Texas Property Tax Code? - ✔️✔️land,
improvements, a mine or quarry, minerals in place and standing timber
Highest and Best Use (definition, meeting certain conditions) - ✔️✔️The reasonably
probable use of property that results in the highest value.
This simple definition will serve as a point of departure for examining
the concept in the rest of this chapter.
To be reasonably probable, a use must meet certain conditions:
physically possible (or it is reasonably probable to
render it so).
legally permissible (or it is reasonably probable to
render it so).
financially feasible.
A taxing unit may elect to allow for split payments, with equal payments due before... -
✔️✔️December 1 and July 1
Income capitalization approach definition - ✔️✔️Analyzes the property's capacity to
generate future income to indicate the present value. This method of estimating market
value is generally used on property that is leased.
Chattel - ✔️✔️Personal Property
Appraisal Roll - ✔️✔️A listing of all appraisal records, as changed by order of the ARB
and approved by that board, constitute the appraisal roll for the district. A listing of all
appraisal records within an appraisal district.
Depreciation - ✔️✔️Loss of usefulness and value due to physical deterioration,
functionality, or economic conditions.
Gross Rent Multiplier (GRM) - ✔️✔️A number, that when multiplied by a property's
gross rents, producers an estimate of market value. Appraisal districts may use a gross
rent multiplier primarily on residential property that is not owner occupied in lieu of other
appraisal methods if it produces the best estimate of fair market value. The multiplier is
derived from interest and risks rates common to the area much like the rates used in the
income approach to value.
Cost Approach to Value - ✔️✔️Method of estimating market value based on current
cost to replace, less depreciation. Using the cost approach to estimate market value is
one of three acceptable appraisal methods. Once the current cost to replace the
improvements is established, depreciation is deducted and the value of the land is
added to estimate current market value
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