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20 Cards in this Set

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WHAT IS THE LAND RESIDUAL TECHNIQUE ?
IN THE LAND RESIDUAL TECHNIQUE, THE NET INCOME EARNED BY A BUILDING IS DEDUCTED FROM THE TOTAL NET INCOME OF THE PROPERTY. THE REMAINDER IS THEN CAPITALIZED TO DETERMINE THE LAND CAPITALIZATION RATE.
WHAT IS THE ALLOCATION METHOD ?
IN ALLOCATION, THE LAND IS TREATED AS A PERCENTAGE OF TOTAL PROPERTY VALUE. THIS TECHNIQUE IS MOST RELIABLE WHEN IMPROVEMENTS ARE NEW.
WHAT IS THE EXTRACTION METHOD ?
EXTRACTION IS A VARIATION OF ALLOCATION IN WHICH THE VALUE OF THE IMPROVEMENTS IS DEDUCTED FROM THE TOTAL VALUE TO DERIVE THE LAND VALUE.
WHAT IS REPRODUCTION COST ?
REPRODUCTION COST IS THE COST OF CONSTRUCTION AT CURRENT PRICES OF AN EXACT REPLICA USING THE SAME MATERIALS AND METHOD.
WHAT IS REPLACEMENT COST ?
REPLACEMENT COST IS THE COST OF CONSTRUCTION AT CURRENT PRICES OF A BUILDING HAVING UTILITY EQUIVALENT TO THE SUBJECT BUT BUILT WITH MODERN AND CURRENT MATERIALS AND METHOD.
WHAT ARE THE 2 METHODS OF ESTIMATING ACCRUED DEPRECIATION ?
ECONOMIC AGE-LIFE METHOD

BREAKDOWN METHOD
WHAT IS THE FORMULA FOR THE ECONIMIC AGE-LIFE METHOD ?
EFFECTIVE AGE / TOTAL ECONOMIC LIFE = % OF ACCRUED DEPRECIATION.
WHAT IS THE TOTAL ECONOMIC LIFE?
THE TOTAL ECONOMIC LIFE IS THE PERIOD WHICH IMPROVEMENTS WILL CONTRIBUTE TO PROPERTY VALUE.
WHAT IS THE REMAINING ECONOMIC LIFE ?
THE REMAINING ECONOMIC LIFE IS THE ESTIMATED REMAINING PERIOD OVER WHICH THE IMPROVEMENTS WILL CONTINUE TO CONTRIBUTE TO PROPERTY VALUE.
WHAT IS THE EFFECTIVE AGE ?
IT IS THE DIFFERENCE OF THE TOTAL ECONOMIC LIFE AND THE REMAINING ECONOMIC LIFE.
WHAT IS THE BREAKDOWN METHOD ?
THIS METHOD CATAGORIZES ACCRUED DEPRECIATION AS:

PHYSICAL DETERIORATION (WEAR AND TEAR)

FUNCTIONAL OBSOLESENCE (DESIGN OR EQUIPMENT DEFICIENCIES)

OR EXTERNAL/ECONOMIC OBSOLESENCE (LOCATION)
THE TWO PARTIES TO A LEASE ARE THE ?
LESSOR (LANDLORD)

AND

LESSEE (TENANT)
WHAT IS A FLAT LEASE ?
A FLAT LEASE FEATURES CONSTANT RENT OVER THE LEASE TERM.
WHAT IS AN ESCALATION CLAUSE ?
AN ESCALATION CLAUSE COMPENSATES THE LESSOR FOR INFLATION BY MAKING RENT ADJUSTMENTS BASED ON AN INDEX OR EXPENSE INCREASE.
WHAT IS A GROSS LEASE ?
IN A GROSS LEASE, THE LESSOR PAYS OPERATING EXPENSES.
WHAT IS A NET LEASE ?
IN A NET LEASE, THE LESSEE PAYS OPERATING EXPENSES.
WHAT IS A PERCENTAGE LEASE ?
IN A PERCENTAGE LEASE, THE LESSEE PAYS A BASE RENT PLUS A PERCENTAGE OF GROSS INCOME FROM BUSINES OPERATIONS.
WHAT IS CONTRACT RENT ?
CONTRACT RENT IS THE ACTUAL RENT AGREED UPON IN THE LEASE.
WHAT IS EXCESS RENT ?
EXCESS RENT IS THE AMOUNT BY WHICH CONTRACT RENT EXCEEDS MARKET RENT.
WHAT IS OVERAGE RENT ?
OVERAGE RENT IS THE AMOUNT OF RENT PAID OVER AND ABOVE THE BASE RENT IN A PERCENTAGE LEASE.