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53 Cards in this Set

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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
Cost-benefit 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 time-weighted
Investment value
subjective value; value to a particular investor, or resulting from specific non-market 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
Risk-adjusted 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)
Time-weighted 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