Quiz 2/IAAO 102 Quiz 2: Questions & Answers: Updated A+ Score Solution

A property comparable to your subject property has a net operating income of $1,200,000 with an annual debt service of $800,000. The property was financed with a loan for 70% of its value, at 7.95% for 20 years. The annual mortgage constant for this loan is 10%. Your subject property has a net operating income of $840,000. What is the indicated subject value? A. $7,850,000 B. $8,000,000 C. $8,400,000 D. $7,600,000 (Ans- This is solved by using the Debt Coverage Ratio (DCR) method: A property comparable to your subject property has a net operating income of $1,200,000 with an annual debt service of $800,000. The property was financed with a loan for 70% of its value, at 7.95% for 20 years. The annual mortgage constant for this loan is 10%. Your subject property has a net operating income of $840,000. What is the indicated subject value? A. $7,850,000 B. $8,000,000 C. $8,400,000D. $7,600,000 Stephanie Pratt- says the answers are not very detailed When market rent exceeds contract rent the difference is ____________________. A. excess rent B. contract rent C. effective rent D. deficit rent (Ans- When market rent exceeds contract rent the difference is