What is the primary distinction, for appraisal purposes, between 'vacancy loss' and 'collection loss'?
Correct Answer
C) Vacancy loss is for unoccupied space; collection loss is for occupied space where rent is not collected.
Correct. Vacancy loss is an allowance for the periodic loss of income due to unoccupied space. Collection loss (or credit loss) is an allowance for losses from non-payment of rent by occupants of otherwise occupied space. Both are typically estimated together as a single percentage and deducted from Potential Gross Income to arrive at Effective Gross Income.
Why This Is the Correct Answer
Correct. Vacancy loss is an allowance for the periodic loss of income due to unoccupied space. Collection loss (or credit loss) is an allowance for losses from non-payment of rent by occupants of otherwise occupied space. Both are typically estimated together as a single percentage and deducted from Potential Gross Income to arrive at Effective Gross Income.
More Income Approach Questions
In a percentage lease, rent is commonly structured as:
In a DCF, what is the reversion?
Potential gross income differs from effective gross income in that PGI assumes:
The reversion in a discounted cash flow model represents:
Building A (new, credit tenant, 20-year lease) and Building B (older, month-to-month tenants) sell the same week. Their cap rates should differ how?
An overall rate extracted from a sale whose NOI excluded reserves, applied to a subject NOI that includes them, will:
Replacement reserves cover which kind of expenditure?
An appraiser is analyzing a mixed-use property with retail and office components. The retail segment has a potential gross income of $180,000 with a market vacancy of 8%. The office segment has a potential gross income of $120,000 with a market vacancy of 12%. What is the overall effective gross income for the property?
The mortgage constant represents:
Applying a GRM of 164 to a subject renting at $2,650 monthly indicates a value of:
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