IAAO 102 CHAPTER 3 REVIEW
QUESTIONS AND ANSWESRS
5 Methods of developing the overall capitalization rate (Ro) - ans-
sw sw sw sw sw sw sw sw sw sw
1. derivation from comparable sales
sw sw sw sw sw
2. band of investment (mortgage and equity components)
sw sw sw sw sw sw sw
3. net income ratio
sw sw sw
4. debt coverage ratio
sw sw sw
5. band of investment (land and improvement components)
sw sw sw sw sw sw sw
when developing the overall capitalization rate from market comparisons, three critical ite
sw sw sw sw sw sw sw sw sw sw sw
ms which must be highly comparable between comparable sales and the subject property
sw sw sw sw sw sw sw sw sw sw sw sw sw
are: - ans-1. land-to-improvement ratio
sw sw sw sw
2. operating expense ratio
sw sw sw
3. remaining economic life
sw sw sw
the four components of the summation method of estimating an overall yield rate (Yo) [pro
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
perty discount rate] are: - ans-1. safe rate
sw sw sw sw sw sw sw sw
2. risk rate
sw sw
3. non-liquidity rate
sw sw sw
4. management rate
sw sw
another name for the mortgage capitalization rate (RM) is the - ans-
sw sw sw sw sw sw sw sw sw sw sw
mortgage annual constate sw sw
the_______________ technique computes a weighted average of the mortgage capitaliz sw sw sw sw sw sw sw sw sw
ation rate (RM) and equity capitalization rate (RE). The resulting weighted average is calle
sw sw sw sw sw sw sw sw sw sw sw sw sw
d the overall capitalization rate (Ro) - ans-band of investment
sw sw sw sw sw sw sw sw sw
the _________ is the percentage that annual real estate taxes are in relation to total prope
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
rty value - ans-effective tax rate
sw sw sw sw sw
name the two methods of developing an effective tax rate - ans-1. EAT formula
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
2. market comparison
sw sw
the net income ratio method can be used to develop an overall capitalization rate when the
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
net income ratio is divided by the - ans-effective gross income multiplier
sw sw sw sw sw sw sw sw sw sw sw sw
what are the three components of an overall capitalization rate: - ans-1. overall yield rate
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
2. recapture rate
sw sw sw
QUESTIONS AND ANSWESRS
5 Methods of developing the overall capitalization rate (Ro) - ans-
sw sw sw sw sw sw sw sw sw sw
1. derivation from comparable sales
sw sw sw sw sw
2. band of investment (mortgage and equity components)
sw sw sw sw sw sw sw
3. net income ratio
sw sw sw
4. debt coverage ratio
sw sw sw
5. band of investment (land and improvement components)
sw sw sw sw sw sw sw
when developing the overall capitalization rate from market comparisons, three critical ite
sw sw sw sw sw sw sw sw sw sw sw
ms which must be highly comparable between comparable sales and the subject property
sw sw sw sw sw sw sw sw sw sw sw sw sw
are: - ans-1. land-to-improvement ratio
sw sw sw sw
2. operating expense ratio
sw sw sw
3. remaining economic life
sw sw sw
the four components of the summation method of estimating an overall yield rate (Yo) [pro
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
perty discount rate] are: - ans-1. safe rate
sw sw sw sw sw sw sw sw
2. risk rate
sw sw
3. non-liquidity rate
sw sw sw
4. management rate
sw sw
another name for the mortgage capitalization rate (RM) is the - ans-
sw sw sw sw sw sw sw sw sw sw sw
mortgage annual constate sw sw
the_______________ technique computes a weighted average of the mortgage capitaliz sw sw sw sw sw sw sw sw sw
ation rate (RM) and equity capitalization rate (RE). The resulting weighted average is calle
sw sw sw sw sw sw sw sw sw sw sw sw sw
d the overall capitalization rate (Ro) - ans-band of investment
sw sw sw sw sw sw sw sw sw
the _________ is the percentage that annual real estate taxes are in relation to total prope
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
rty value - ans-effective tax rate
sw sw sw sw sw
name the two methods of developing an effective tax rate - ans-1. EAT formula
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
2. market comparison
sw sw
the net income ratio method can be used to develop an overall capitalization rate when the
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
net income ratio is divided by the - ans-effective gross income multiplier
sw sw sw sw sw sw sw sw sw sw sw sw
what are the three components of an overall capitalization rate: - ans-1. overall yield rate
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
2. recapture rate
sw sw sw
