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53 Cards in this Set
 Front
 Back
Absorption Study

a study to determine the length of time to sell out or lease up property


Analysis

synonymous with consulting & evaluation


"At risk" rule

1986 Tax Act allows the deduction of losses only to the extent the $ in the operation is at risk


Breakeven point

in payback period, the length of time when all capital is recovered in an investment


Capital gain

amount of net sale price over the adjusted basis


Consulting

assignments involving real property other than appraisal & review


Costbenefit study

used to establish the worth of a project or item relative to the cost of the project or item


Counseling

as defined by the CREs,...advice...judgement on diversified problems in real estate. THe counselors go beyond consulting & may represent the client's interest


Debt coverage ratio (DCR)

NOI divided by debt service


Discounted cash flow (DCF) analysis

a valuation tool that expresses patterned cash flow discounted to a present value (minimum information: income, changes in income, revrsion, discount rate); a yield capitalization method where anticipated future cash flows are discounted to PV


Expected values

a measure of investment performance where possible outcomes are weighted with %s that add to 100%


Evaluation

same as consulting or analysis


Feasibility study

a study used to determine if a particular use should be developed or to select among alternative uses


Financial management rate of return (FMRR)

an adjusted or modified IRR


Geographical Information Systems (GIS)

a mapping & data base combination where data is overlaid on a map grid


Highest & best use study

a study to determine the HBU of a site or improved property


Internal rate of return (IRR)

the rate (yield) that results in a net present value (NPV) = 0. The rate that satisfies PV of inflows to an investment minus the PV of investment = 0


International valuation

valuing outside of the U.S.


Investment proceeds per dollar invested

a measure of investment performance where the sum of anticipated returns divided by the investment; it is not timeweighted


Investment value

subjective value; value to a particular investor, or resulting from specific nonmarket supported assumptions of an individual or investor


Linear programming

complex analysis that is used to maximize given various constraints including linear & nonlinear constraints as well as area constraints


Marketability study

study of market for a particular property


Market equilibrium

the balance of supply & demand in a market; the optimal price & quantity in a market


Market study

a study of a general market area as opposed to a specific property


Market value

an objective value; a value that meets the definition requirements of a market value definition


Measures of investment performance

tools used to rank investments or test expected performance versus investor criteria


Monte Carlo simulation

an analytical tool where all elements are assigned probabilities then integrated into a larger theoretical population


Net present value (NPV)

PV of inflows minus PV of outflows (investment)


Network analysis

an analytical tool to schedule & conduct project activities


Passive activity loss

a category of income from passive investments (where the investor has no "material" participation in the enterprise)


Payback period

period of time when an investor gets all their $ back; it ignores time value of $


Point estimate

single value indication


Pricing or rent projection study

a study to determine rent or price for a property


Probability (P)

the likelihood of the occurrence of an event


Probability analysis

the study of the likelihood of a certain occurence or event


Profitability index (PI)

PV of inflows divided by investment, or PV of outflows


Rating grid

a summary of property factors with a presentation of relative rankings


Regression analysis

measuring the relationship between an independent variable(s) & dependent variables; simple regression: Yc = a + bX;
multiple regression: Yc = a + b1X1 +b2X2...) 

Reinvestment presumption

that the cash flows are reinvested @ the IRR


Rent projection or pricing study

a study to determine rent or price for a property


Riskadjusted discount rate

loading yield rates for specific risk considerations


Risk analysis

identifying uncertainty in potential returns


Sampling (random sample/judgement sample)

pulling data from a population to make inferences about the population after statistical analysis


Sensitivity analysis

entering 1 or more variables at a time in an analytical model to see the affect of the change on the outcome


Tax Reform Act of 1986

IRS code as of 1986


Tax shelter

not taxing some of income earned on an investment (e.g. depreciation may be deducted even if the value increases)


Timeweighted rate

an average of all instantaneous rates over a projection or other stated period of time


Topographical Integrated Geographic Encoding & Referencing (TIGER) datafiles

a GIS system of data at a local level established by the 1990 census; contains data concerning traffic, land use & population; it integrates a spreadsheet with mapping


Transaction price

the amount actually paid by a buyer to a seller


Uncertainty

the possibility of future projections being incorrect; also risk


Upside/downside potential

the potential of less or greater value or outcome


Utility functions

a measure of investment performance where the possible outcome value is multiplied by a % of chance of occurence times a utility function


Yield analysis

IRR analysis; determining the overall yield on an investment
