REE4103 Exam 3 Questions and Answers
All are used in valuation of income-producing property except: -
✔️Income Taxes
Capitalization is employed in the: -
✔️Income approach - income properties
A gross lease is one that: -
✔️The landlord pays for all operating expenses
When estimating the market value of an income-producing property, the appraiser will not consider:
-
✔️Income Taxes attributable
In income capitalization, value is measured as the present worth of the: -
✔️net operating income + the reversion
Income capitalization techniques are not typically used in valuing: -
✔️Properties that do not generate Income
The monthly rental being paid for a comparable rental property is called: -
✔️Contract rent
The procedure used to convert future benefits into present value is: -
✔️yield Capitalization (discount cash flow model)
When the landlord permits the tenant occupancy and use of the space each year for a fixed amount
of money, the lease is described as -
✔️fixed or gross lease.
The basic formula for property valuation via income capitalization is: -
,✔️Discount Cash Flow Analysis V=I/R
Which approach would probably be given the most weight in appraising a large office building? -
✔️Income capitalization approach
which principle of value best affirms that value is the present worth of expected future benefits? -
✔️anticipation
The appraisal approach that normally would be most useful in valuing investment property is the: -
✔️Income approach
Value is said to be the present worth of future benefits. This defines the principle of: -
✔️Net Present Value
The income capitalization approach supports what two basic methodologies? -
✔️Direct Capitalization Yield Capitalization
These models discount the expected future income from property with any reversion value or sale
proceeds to estimate the property's present (market) value: -
✔️Discount cash flows + Yield
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3: $14,000 Year 4:
$16,000; would be called what type of lease? -
✔️Variable or step-up
A lease which provides for rental changes annually tied to the consumer price index is what kind of
lease? -
✔️Index Lease
A lease which requires the landlord and tenant to arbitrate the amount of the lease upon the tenant
exercising a lease extension option is what type of lease? -
✔️Reevaluation Lease
, The Landlord pays for all the expenses in a: -
✔️Gross lease
The Landlord pays for only the structural repairs in what type of lease? -
✔️triple net lease
In fee simple valuations, all rentable space is estimated at what levels? -
✔️market rent
At the time of an appraisal a warehouse is leased to a quality tenant for $9.00/square foot. The rent
obtainable in the market at the same time is $6.00/square foot. The lease with the landlord is
termed a: -
✔️negative leasehold
Rent pursuant to a lease that is paid over and above the guaranteed minimum based on gross sales
of a retail tenant is called: -
✔️overage rent (excess)
The level of sales at which the percentage rent in a lease exactly equals the base rent is called the? -
✔️natural breakpoint
The level of sales at which the percentage clause in a lease is activated is called the? -
✔️breakpoint
The amount of net operating income that remains after debt service is paid is called: -
✔️equity dividend
The lump-sum benefit an investor receives upon termination of an investment is called: -
✔️reversion
Operating expenses used for valuation purposes generally do not include: -
All are used in valuation of income-producing property except: -
✔️Income Taxes
Capitalization is employed in the: -
✔️Income approach - income properties
A gross lease is one that: -
✔️The landlord pays for all operating expenses
When estimating the market value of an income-producing property, the appraiser will not consider:
-
✔️Income Taxes attributable
In income capitalization, value is measured as the present worth of the: -
✔️net operating income + the reversion
Income capitalization techniques are not typically used in valuing: -
✔️Properties that do not generate Income
The monthly rental being paid for a comparable rental property is called: -
✔️Contract rent
The procedure used to convert future benefits into present value is: -
✔️yield Capitalization (discount cash flow model)
When the landlord permits the tenant occupancy and use of the space each year for a fixed amount
of money, the lease is described as -
✔️fixed or gross lease.
The basic formula for property valuation via income capitalization is: -
,✔️Discount Cash Flow Analysis V=I/R
Which approach would probably be given the most weight in appraising a large office building? -
✔️Income capitalization approach
which principle of value best affirms that value is the present worth of expected future benefits? -
✔️anticipation
The appraisal approach that normally would be most useful in valuing investment property is the: -
✔️Income approach
Value is said to be the present worth of future benefits. This defines the principle of: -
✔️Net Present Value
The income capitalization approach supports what two basic methodologies? -
✔️Direct Capitalization Yield Capitalization
These models discount the expected future income from property with any reversion value or sale
proceeds to estimate the property's present (market) value: -
✔️Discount cash flows + Yield
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3: $14,000 Year 4:
$16,000; would be called what type of lease? -
✔️Variable or step-up
A lease which provides for rental changes annually tied to the consumer price index is what kind of
lease? -
✔️Index Lease
A lease which requires the landlord and tenant to arbitrate the amount of the lease upon the tenant
exercising a lease extension option is what type of lease? -
✔️Reevaluation Lease
, The Landlord pays for all the expenses in a: -
✔️Gross lease
The Landlord pays for only the structural repairs in what type of lease? -
✔️triple net lease
In fee simple valuations, all rentable space is estimated at what levels? -
✔️market rent
At the time of an appraisal a warehouse is leased to a quality tenant for $9.00/square foot. The rent
obtainable in the market at the same time is $6.00/square foot. The lease with the landlord is
termed a: -
✔️negative leasehold
Rent pursuant to a lease that is paid over and above the guaranteed minimum based on gross sales
of a retail tenant is called: -
✔️overage rent (excess)
The level of sales at which the percentage rent in a lease exactly equals the base rent is called the? -
✔️natural breakpoint
The level of sales at which the percentage clause in a lease is activated is called the? -
✔️breakpoint
The amount of net operating income that remains after debt service is paid is called: -
✔️equity dividend
The lump-sum benefit an investor receives upon termination of an investment is called: -
✔️reversion
Operating expenses used for valuation purposes generally do not include: -
