Real Estate Test 2 Ch 9 Set One

Front 1

the process of converting periodic income into a value estimate

Back 1

income capitalization

Front 2

equal to expected annual rental income, net vacancies, minus operating and capital expenses

Back 2

net operating income

Front 3

shows the appraiser's estimate of stabilized income and expenses

Back 3

reconstructed operating statement

Front 4

the total annual rental income the property would produce assuming 100 percent occupancy

Back 4

potential gross income

Front 5

the rental income the property would most probably command if placed for lease on the open market as of the effective date of appraisal

Back 5

market rent

Front 6

refers to the actual rent being paid under contractual commitments between owners and tenants.

Back 6

contract rent

Front 7

the proportion of potential gross income not collected--even when the use (rental) market is in equilibrium

Back 7

natural vacancy rate

Front 8

the net effect of subtracting the vacancy allowance and adding miscellaneous income is

Back 8

effective gross income

Front 9

typical expenses owners incur in maintaining and operating rental properties are

Back 9

operating expenses

Front 10

replacements and alterations to a building that materially prolong its life and increase its value.

Back 10

capital expenditures (CAPX)

Front 11

A cash flow forecast prepared to facilitate discounted cash flow analysis

Back 11

pro forma

Front 12

the process of estimating a property's market value by dividing a single year stabilized NOI by a capitalization rate

Back 12

direct capitalization

Front 13

estimating the appropriate cap rate from comparable property sales

Back 13

direct market extraction

Front 14

the type of capitalization rate used in direct capitalization, calculated by dividing comparable properties net operating incomes by their selling price.

Back 14

Overall capitalization rate or (in-cap rate)

Front 15

the expected total rate of return

Back 15

internal rate of return

Front 16

for some smaller income producing properties, appraisers may use a variant of the direct income capitalization method known as

Back 16

gross income multiplier (GIM)

Front 17

: estimating the sale price at the end of the expected holding period.

Back 17

terminal value

Front 18

Rate used to convert annual net cash at the end of an expected holding period into an estimate of future sale price.

Back 18

Terminal capitalization rate or going-out cap rate:

Front 19

the expected selling price less selling expenses

Back 19

net sale proceeds

Front 20

complete ownership

Back 20

fee simple estate

Front 21

ownership subject to lease

Back 21

leased fee estate

Front 22

when the invested capital reverts back to the owner

Back 22

reversion