Podcast
Questions and Answers
What is the term for how well a property is designed to perform its intended function?
What is the term for how well a property is designed to perform its intended function?
- Economic efficiency
- Functional efficiency (correct)
- Physical durability
- Fabrication quality
Which of the following factors should be considered when forecasting future benefits from a proposed venture?
Which of the following factors should be considered when forecasting future benefits from a proposed venture?
- The property's structural age
- The property's immediate past operating history (correct)
- The likely change in a property's market value over the holding period (correct)
- Anticipated changes in the social and political environment (correct)
Which factor is NOT typically considered when searching for properties to use as comparables?
Which factor is NOT typically considered when searching for properties to use as comparables?
- Amenities offered by competing properties
- The size of the properties (correct)
- The location of the properties
- The functional efficiency of other properties
Which of the following is not classified as an operating expense?
Which of the following is not classified as an operating expense?
What is one method to assess a property's operational effectiveness?
What is one method to assess a property's operational effectiveness?
What factor might influence a property's market value during its holding period?
What factor might influence a property's market value during its holding period?
In property valuation, which element is crucial for understanding future trends?
In property valuation, which element is crucial for understanding future trends?
What is the expense generated by the movement of people and things at one location called?
What is the expense generated by the movement of people and things at one location called?
What is the effective gross income of a property with a potential gross rent of $1,500,000, operating expenses of $765,750, a vacancy allowance of $45,000, and other income of $9,000?
What is the effective gross income of a property with a potential gross rent of $1,500,000, operating expenses of $765,750, a vacancy allowance of $45,000, and other income of $9,000?
What defines a property's market area?
What defines a property's market area?
What defines a shopping center's trade area?
What defines a shopping center's trade area?
What is loss of functional efficiency due to defective or dated design called?
What is loss of functional efficiency due to defective or dated design called?
What term defines the costs related to the physical deterioration of a property?
What term defines the costs related to the physical deterioration of a property?
Which of these factors affects the market area of a property?
Which of these factors affects the market area of a property?
Why is periodic re-evaluation of assets in a portfolio necessary?
Why is periodic re-evaluation of assets in a portfolio necessary?
Flashcards
Functional Efficiency
Functional Efficiency
The ability of a property to effectively fulfill its intended purpose.
Forecasting Future Benefits
Forecasting Future Benefits
Predicting future gains from an investment by considering factors like market changes and operational history.
Factors Limiting Comparable Properties
Factors Limiting Comparable Properties
Factors that narrow down the pool of comparable properties, such as amenities, functionality, and location.
Operating Expenses
Operating Expenses
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Transfer Costs
Transfer Costs
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Potential Gross Income (PGI)
Potential Gross Income (PGI)
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Market Area
Market Area
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Trade Area
Trade Area
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Functional Obsolescence
Functional Obsolescence
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Effective Gross Income (EGI)
Effective Gross Income (EGI)
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Net Operating Income (NOI)
Net Operating Income (NOI)
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Market Information
Market Information
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Portfolio Re-evaluation
Portfolio Re-evaluation
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Economic Environment Analysis
Economic Environment Analysis
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Market Research as a Planning Tool
Market Research as a Planning Tool
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Competitive Rent Analysis
Competitive Rent Analysis
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Study Notes
Real Estate Terminology
- Transfer Costs: Expenses associated with moving people and goods.
- Potential Gross Income (PGI): Projected revenue if a property were fully occupied at market rates with no uncollectible rent.
- Effective Gross Income (EGI): PGI less vacancy and collection losses. Calculated by subtracting the vacancy allowance and other expenses from the potential gross income.
- Operating Expenses (OE): Costs associated with running a property, excluding debt service and income taxes. Examples include property taxes and maintenance fees; NOT income taxes.
- Market Area: The geographic region from which tenants and customers are drawn. It's not a precisely defined area, but encompasses the area where most customers reside.
- Trade Area: The geographical area from which a significant portion of customers come. It isn't solely based on travel time to the location.
- Functional Obsolescence: Loss of efficiency due to outdated or defective design.
- Functional Efficiency: The degree to which a property is designed to function as intended.
- Physical Deterioration: A decrease in a property's condition, not due to design.
- Economic Obsolescence: Loss of value due to external factors like changes in the market or surrounding area.
- Market Research: A process used to estimate likely cash flow from investment options, assess investment yields, and re-evaluate assets in a portfolio for optimal results. This can aid in deciding whether to hold, refinance, refurbish, or convert properties.
Property Analysis
- Forecasting Future Benefits: Requires considering past operational history, anticipated social/political changes, and possible market value fluctuations. All relevant factors should be assessed.
- Comparable Properties: Finding comparable properties is limited by various factors, including competing properties' amenities, their functional efficiency, and location.
- Market Research Design: Real estate market analyses can involve several stages, starting with broad national/international economic trends and drilling down to regional and local trends, and ultimately to the specific property.
- Geographic Information Systems (GIS): A system that relates information to geographic locations to allow spatial analysis of data. It helps relate information from different geographic areas, like mapping the local market.
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Description
Test your knowledge on essential real estate terminology including concepts like Effective Gross Income, Operating Expenses, and market areas. This quiz is perfect for aspiring real estate professionals or anyone interested in the industry. See how well you understand the language of real estate!
