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20 Cards in this Set
- Front
- Back
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WHAT IS THE INCOME CAPITALIZATION ?
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INCOME CAPITALIZATION IS THE PROCESS OF CONVERTING FUTURE FINACIAL BENEFITS TO AN ESTIMATE OF PRESENT VALUE.
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WHAT ARE THE 3 FACTORS OF CAPITALIZAION ?
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NET OPERATING INCOME
OPERATING INCOME PRESENT VALUE |
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WHAT ARE THE 3 TYPES OF INCOME ?
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(PGI) POTENTIAL GROSS INCOME
(EGI) EFFECTIVE GROSS INCOME (NOI) NET OPERATING INCOME |
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WHAT IS (PGI) POTENTIAL GROSS INCOME ?
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PGI IS THE TOTAL AT FULL OCCUPANCY BEFORE OPERATING EXPENSES ARE DEDUCTED. IT INCLUDES INCOME FROM VENDING, WASHERS AND DRYERS, GARAGE FEES, ETC.
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WHAT IS VACANCY AND COLLECTION LOSS ?
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VACANCY AND COLLECTION LOSS IS THE LOSS OF INCOME DUE TO NONPAYMENT OF RENT AND VACANCY.
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WHAT IS (EGI) EFFECTIVE GROSS INCOME ?
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EGI IS THE POTENTIAL GROSS INCOME MINUS VACANCY AND COLLECTION LOSS.
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WHAT IS (NOI) NET OPERATING INCOME ?
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NOI IS THE EFFECTIVE GROSS INCOME MINUS OPERATING EXPENSES.
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WHAT ARE OPERATING EXPENSES ?
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OPERATING EXPENSES ARE EXPENSES INCURRED TO MAINTAIN THE PROERTY PLUS AN ALLOWANCE FOR REPLACING CERTAIN ITEMS.
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WHAT IS DEBT SERVICE ?
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DEBT SERVICE IS THE ANNUAL PRINCIPAL AND INTEREST PAYMENT.
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WHAT IS THE MORTGAGE CONSTANT OR THE MORTGAGE CAPITALAZTION RATE ?
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IT IS THE ANNUAL DEBT SERVICE DIVIDED BY THE LOAN AMOUNT.
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WHAT IS THE GROSS INCOME MULTIPLIER AKA GROSS RENT MULTIPLIER ?
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THEY SHOW THE RATIO OF SALES PRICE TO GROSS INCOME AT THE TIME OF SALE.
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WHAT ARE THE TWO KINDS OF GROSS INCOME MULTIPLIERS ?
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(PGIM)POTENTIAL GROSS INCOME MULTIPLIER
AND (EGIM) EFFECTIVE GROSS INCOME MULTIPLIER. |
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WHAT ARE THE 3 FACTORS IN COMPUTING VALUE USING INCOME MULTIPLIERS ?
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(PIM = PIE CHART)
PRICE INCOME MULTIPLIER |
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PGI = $50,000
VACANCY RATE = 7% MANAGEMENT FEES = 5% OF RENT CONTROLLED INSURANCE = $2,000 PROPERTY TAX = %5280 OTHER EXPENSES = $4,250 ANNUAL DEBT SERVICE = $17,000 WHAT IS THE NOI ? |
PGI - VACANCY = EGI
EGI - OPERATING EXPENSES = NOI ANSWER = $32,645 |
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HOW TO FIND THE PRE-TAX CASH FLOW ?
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NOI - DEBT SERVICE = PRE TAX CASH FLOW
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HOW TO FIND EFFECTICE GROSS INCOME ?
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PGI - VACANCY = EGI
OR NOI + OPERATING EXPENSES = EGI |
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HOW TO FIND VACANCY ?
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PGI - EGI = VACANCY
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HOW TO FIND POTENTIAL GROSS INCOME ?
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EGI + VACANCY = PGI
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HOW TO FIND NET OPERATING INCOME ?
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EGI - OPERATING EXPENSES = NOI
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HOW TO FIND OPERATING EXPENSES ?
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EGO - NOI = OPERATING EXPENSES
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