CCIM 101 MODULE 4
(GRM ) GROSS RENT MULTIPLER - ANS-PURCHASE PRICE DIVIDED BY PRI
(NOI) NET OPERATING INCOME - ANS-. POTENTIAL RENTAL INCOME
. VACANCY AND CREDIT LOST
. OTHER INCOME ( LAUNDRY, VENDING MACHINE ETC)
. Operating Costs ABSOLUTE GROSS LEASE - ANS-THE OWNER PAYS ALL OF THE
OPERATING EXPENSES
ABSOLUTE NET LEASE - ANS-TENANT PAYS ALL OPERATING EXPENSES
ACQUISITION CAP RATE - ANS-NOI DIVIDE BY PURCHASE PRICE
CALCULATING VACANCY AND CREDIT LOSSES - ANS-. DETERMINE COMPETITIVE
MARKET RENTS IN THE AREA
. Examine the Property's Rent History. . ASSESS THE AVAILABILITY OF ALTERNATIVE
SPACE
. ESTABLISH VACANCY RATES FOR THE PARTICULAR MARKET
. REVIEW THE LENGTH OF EXISTING LEASES AND LEASE GUARANTEES.
. ASSESS TENANT QUALITY, ECONOMIC STRENGTH, AND CURRENT LEASE
SATISFACTION
CAP RATE AND RETURN ON INVESTMENT - ANS-A COMMON MISCONCEPTION IS THE
CAP RATE AND RETURN ON INVESTMENT ARE ONE IN THE SAME . THIS IS RARELY
THE CASE
DIRECT CAPITALIZATION DIFINITION - ANS-THE PROCESS OF CONVERTING A FUTURE
INCOME STREAM INTO A PRESENT VALUE (PV) BY DIVIDING A A FUTURE INCOME
AMOUNT BY A CAP RATE
DIRECT CAPITALIZATION FORMULAS - ANS-INCOME (NOI) (I) = R X V
RATE (CAP) (R) = I / V
VALUE (V) = I / R
DISPOSITION CAP RATE - ANS-SALE PRICE
DISPOSITION ALSO REFERRED TO AS TERMINAL CAP RATE
HYBRID LEASE - ANS-WHO PAYS WHICH OPERATING EXPENSES IS NEGOTIATED
BETWEEN THE TENANT AND OWNER
INVESTMENT VALUE - ANS-THE PRICE AN INVESTOR IS WILLING TO PAY FOR A
SPECIFIC PROPERTY
ITEM EXCLUDE FROM OPERATING EXPENSES - ANS-. PRINCIPAL AND INTEREST ON
DEBT ENCUMBERING THE PROPERTY ( THIS IS AN OWNER SHIP EXPENSE
. DEPRECIATION (COST RECOVERY) ( EXPENSIVE OF OWNERSHIP NOT OF
OPERATION)
. CAPITAL EXPENDITURES MAJOR REPAIRS NOT REOCCURRING
. INCOME TAXES OBLIGATION OF INDIVIDUAL
. RESERVES FOR REPLACEMENT FUNDS SET ASIDE FOR MAJOR REPAIRS BOILER,
ROOF, PARKING LOT ETC,, NOT REOCCURRING
(GRM ) GROSS RENT MULTIPLER - ANS-PURCHASE PRICE DIVIDED BY PRI
(NOI) NET OPERATING INCOME - ANS-. POTENTIAL RENTAL INCOME
. VACANCY AND CREDIT LOST
. OTHER INCOME ( LAUNDRY, VENDING MACHINE ETC)
. Operating Costs ABSOLUTE GROSS LEASE - ANS-THE OWNER PAYS ALL OF THE
OPERATING EXPENSES
ABSOLUTE NET LEASE - ANS-TENANT PAYS ALL OPERATING EXPENSES
ACQUISITION CAP RATE - ANS-NOI DIVIDE BY PURCHASE PRICE
CALCULATING VACANCY AND CREDIT LOSSES - ANS-. DETERMINE COMPETITIVE
MARKET RENTS IN THE AREA
. Examine the Property's Rent History. . ASSESS THE AVAILABILITY OF ALTERNATIVE
SPACE
. ESTABLISH VACANCY RATES FOR THE PARTICULAR MARKET
. REVIEW THE LENGTH OF EXISTING LEASES AND LEASE GUARANTEES.
. ASSESS TENANT QUALITY, ECONOMIC STRENGTH, AND CURRENT LEASE
SATISFACTION
CAP RATE AND RETURN ON INVESTMENT - ANS-A COMMON MISCONCEPTION IS THE
CAP RATE AND RETURN ON INVESTMENT ARE ONE IN THE SAME . THIS IS RARELY
THE CASE
DIRECT CAPITALIZATION DIFINITION - ANS-THE PROCESS OF CONVERTING A FUTURE
INCOME STREAM INTO A PRESENT VALUE (PV) BY DIVIDING A A FUTURE INCOME
AMOUNT BY A CAP RATE
DIRECT CAPITALIZATION FORMULAS - ANS-INCOME (NOI) (I) = R X V
RATE (CAP) (R) = I / V
VALUE (V) = I / R
DISPOSITION CAP RATE - ANS-SALE PRICE
DISPOSITION ALSO REFERRED TO AS TERMINAL CAP RATE
HYBRID LEASE - ANS-WHO PAYS WHICH OPERATING EXPENSES IS NEGOTIATED
BETWEEN THE TENANT AND OWNER
INVESTMENT VALUE - ANS-THE PRICE AN INVESTOR IS WILLING TO PAY FOR A
SPECIFIC PROPERTY
ITEM EXCLUDE FROM OPERATING EXPENSES - ANS-. PRINCIPAL AND INTEREST ON
DEBT ENCUMBERING THE PROPERTY ( THIS IS AN OWNER SHIP EXPENSE
. DEPRECIATION (COST RECOVERY) ( EXPENSIVE OF OWNERSHIP NOT OF
OPERATION)
. CAPITAL EXPENDITURES MAJOR REPAIRS NOT REOCCURRING
. INCOME TAXES OBLIGATION OF INDIVIDUAL
. RESERVES FOR REPLACEMENT FUNDS SET ASIDE FOR MAJOR REPAIRS BOILER,
ROOF, PARKING LOT ETC,, NOT REOCCURRING
