When analyzing income and expense data for a multi-tenant office building to develop an opinion of market value, an appraiser includes revenue from parking fees collected by the owner. In the appraiser's income and expense analysis, these parking fees should be treated as part of:
Correct Answer
C) Other Income.
Revenue from sources such as parking, vending machines, or laundry facilities that are incidental to the primary rental of real property is typically classified as 'Other Income.' It is added to effective gross income (which is derived from Potential Gross Income minus vacancy and collection loss) to arrive at a total income figure before operating expenses.
Why This Is the Correct Answer
Revenue from sources such as parking, vending machines, or laundry facilities that are incidental to the primary rental of real property is typically classified as 'Other Income.' It is added to effective gross income (which is derived from Potential Gross Income minus vacancy and collection loss) to arrive at a total income figure before operating expenses.
More income-approach Questions
In a percentage lease, rent is commonly structured as:
Escalation clauses and expense stops in a lease matter to the income analysis because they:
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:
Two identical buildings differ only in risk: one has a single tenant on a short lease, the other five tenants on staggered terms. How do their cap rates compare?
Contract rent on a leased office is $30 per sq ft; market rent is $26. The $4 difference is called:
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 appraiser is analyzing a 15-unit apartment building. Market research indicates a 6% vacancy rate is typical for similar properties, but this property's historical vacancy has averaged 4%. The subject has experienced a 1% collection loss (uncollectible rents) over the past two years. When estimating effective gross income for the subject, what vacancy and collection loss percentage should the appraiser apply?
An overall rate extracted from a sale whose NOI excluded reserves, applied to a subject NOI that includes them, will:
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A rental house sold for $396,000 and rents for $2,200 a month. Its monthly gross rent multiplier is:
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A certified general appraiser is valuing a regional shopping center subject to long-term triple-net leases. One anchor tenant occupies 40% of the GLA under a 12-year lease with fixed annual rent of $1.2 million; the remaining space is leased to smaller tenants at market rates, with rents projected to grow at 2.5% per year. The appraiser develops a discounted cash flow model with a 10-year holding period. Which statement best reflects the appropriate treatment of the anchor tenant’s rent in the DCF model?