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4 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Gross rent multiplier |
Uses the potential or gross rent multiplier (GRM) to determine the value. Value divided by rent |
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Capitalization method |
Determines the propertys future income and operating expenses. This method uses the net operating (NOI) and divides that number by a capitalization rate (cap rate) to determine the value. |
A property is valued at 300,000 with a 5% capitalization rate. If the prospective buyer wants an 8% return on their money the properties value would? 187,500. 300,000 x. 05 =15,000. 15,000 / .08= 187,500. Cap value will move in the opposite direction as the capitalization rate. |
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Annual property operating data sheet (APOD) |
Used to analyze a rental properties under the income approach. The APOD breaks down both in dollar amounts and as percentages the income and specific operating expenses of the subject property so as to determine it's profitability. From these facts, an appraiser then applies formulas to arrive at a current property value. |
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Capitalization |
A process used to:
Convert future benefits to present value. (process)
establish an appropriate rate of return for the investor. (rate used) |
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