Income Approach

An appraiser is valuing a property that generates $8,000 per month in gross rent. Recent sales of similar properties show gross rent multipliers ranging from 110 to 130. What is the indicated value range using GRM analysis?

A property generates $85,000 in Net Operating Income and sells for $1,062,500. What is the overall capitalization rate?

Which of the following is NOT typically included in operating expenses for income capitalization?

A property sold for $450,000 and generates $3,750 in monthly gross rent. What is the gross rent multiplier (GRM)?

What is the present value of $150,000 to be received in 5 years, assuming a discount rate of 8%?

A property sold for $350,000 and generates $2,800 per month in gross rental income. What is the Gross Rent Multiplier (GRM)?

What is the present value of $100,000 to be received in 5 years, assuming a 10% discount rate?

A property has a net operating income of $85,000 and annual debt service of $68,000. What is the debt coverage ratio?

In a percentage lease, rent is commonly structured as:

A property generates $150,000 in potential gross income. Market data indicates a 7% vacancy rate and operating expenses of 35% of effective gross income. If the cap rate is 9.5%, what is the indicated value?

A property is purchased for $500,000 with a loan of $400,000. What is the loan-to-value ratio?

A property sold for $400,000 with annual gross rent of $40,000. What is the gross rent multiplier?

Escalation clauses and expense stops in a lease matter to the income analysis because they:

In a DCF, what is the reversion?

A property is financed with 70% debt at 6% interest and 30% equity requiring a 12% return. What is the overall capitalization rate using the band of investment technique?

Potential gross income differs from effective gross income in that PGI assumes:

A building's gross rent multiplier (GRM) is 120. If the monthly rent is $2,500, what is the indicated value?

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?

A property's highest and best use analysis shows that retail use would generate $50,000 annual net income, office use would generate $45,000, and residential use would generate $40,000. Using a 10% capitalization rate, what is the indicated value for retail use?

Contract rent on a leased office is $30 per sq ft; market rent is $26. The $4 difference is called:

A commercial property analysis shows: Potential Gross Income $200,000, Vacancy Rate 8%, Operating Expenses $65,000. Using a 9% cap rate, what is the indicated value?

A property has potential gross income of $180,000, vacancy and collection loss of $15,000, and operating expenses of $65,000. What is the Net Operating Income?

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?

A commercial property has potential gross income of $120,000, vacancy and collection loss of 8%, and operating expenses of $35,000. Using a cap rate of 9.5%, what is the indicated value?

An office building has a gross rental income of $240,000, vacancy rate of 8%, and operating expenses of $75,000. What is the net operating income (NOI)?

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?

A commercial property has a gross income of $240,000 annually and sold for $2,000,000. Three years later, a similar property with gross income of $180,000 is being appraised. Using the gross income multiplier method, what is the indicated value?

What is the primary distinction, for appraisal purposes, between 'vacancy loss' and 'collection loss'?

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?

An office building generates $180,000 in net operating income and has a capitalization rate of 8.5%. What is the indicated value?

A commercial property has a net operating income of $125,000 and is subject to a ground lease with annual rent of $15,000. What is the income attributable to the leased fee interest?

In calculating Net Operating Income (NOI), which of the following would NOT be deducted from Effective Gross Income?

An income stream of $50,000 per year is expected to continue for 10 years. Using a discount rate of 9%, what is the present value? (Present value factor for 10 years at 9% = 6.418)

The band of investment technique is used to:

Using the band of investment technique, calculate the overall cap rate given: 70% debt at 5.5% interest rate, 30% equity requiring 12% return.

A property generates $75,000 in net operating income and is valued at $1,000,000. What is the overall capitalization rate?

A property has gross rental income of $120,000, vacancy and collection loss of $6,000, and operating expenses of $45,000. What is the net operating income?

An appraiser is valuing the leasehold interest in a property where the tenant pays below-market rent. How should this be reflected in the valuation?

A property is valued at $500,000 with a loan amount of $400,000. What is the loan-to-value ratio?

A property has a gross income multiplier of 8.5 and generates annual gross income of $96,000. What is the indicated value?

An appraiser estimates the reversion value for a retail center using a terminal capitalization rate of 7.0%. The projected NOI for Year 11 (the first year after the 10-year holding period) is $385,000. The appraiser then discounts the reversion value back to present value using a yield rate of 8.5%. What is the present value of the reversion?

The principle of anticipation is most directly applied in:

A property sold for $450,000 and generated monthly rent of $3,200. What is the gross rent multiplier (GRM)?

A rental property has a potential gross income of $120,000, vacancy and collection loss of 5%, and operating expenses of $38,000. If the capitalization rate is 9%, what is the indicated value?

An income property sold for $1,500,000 and generates $125,000 in annual gross income. What is the gross income multiplier (GIM)?

A property generates $8,500 in monthly gross rent. If the GRM for the area is 11.2, what is the estimated value?

A 50-unit apartment complex has had 12 units turn over in the past year. What is the turnover rate?

The mortgage constant represents: