IAAO 102 PRACTICE EXAMINATION
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Gross Lease.
Answer: the landlord is required to pay all operating expenses associated
with the real estate.
◍ Effective Gross Income (EGI).
Answer: obtained after determining the potential income for the property
◍ Substitution.
Answer: A property's maximum value tends to be set by the lowest cost or
price at which another property of equivalent utility can be acquired.
◍ List nine factors influencing investors decisions.
Answer: Safety of the investmentLiquidity of the investmentSize of the
investmentUse as collateralTimeManagementAppreciationIncome tax
advantagesLeverage
◍ Mortgage.
Answer: most common type of financing for real estate.
◍ What does IRV stand for?.
Answer: Income, Rate, Value
◍ Misc. Income.
Answer: some misc income could be parking fees, vending machines, coin
operated laundries, etc
◍ A corner lot in a business district is used as a parking lot. The monthly gross
income earned by the property is $12,500 and the monthly expenses are
$2,500. The monthly net income in $10,000. The owner's required rare of
, return for this type of property is 8% per year. What is the value of this
property?.
Answer: $10,000 x 12=$120,000.08 x v ( value)$120,000/08=$1,500,00
◍ Contract Rent.
Answer: Rent the the tenant is paying according to the lease in effect at the
time of appraisal or analysis.
◍ Amortized Mortgage.
Answer: Fixed rate mortgage permanent loan in which the sum of the
principal and interest payments remains fixed throughout the term of the
loan.
◍ What kind of expenses are capital improvements?.
Answer: Improper Expenses.
◍ Contribution.
Answer: the value of a component of real estate can be measured by the
amount it contributes to net operating income because net operating income
can be capitalized into value.
◍ Effective Tax Rate.
Answer: Reflects the relationship between the real estate taxes and the value
of the property.
◍ How to get Net Operating Income.
Answer: Protentional Gross income(PGI)-Vacancy& Collection
Loss+Miscellaneous Income= Effective Gross Income(EGI)- Allowable
Expenses= Net Operating Income(NOI)
◍ Chattel Mortgage.
Answer: a mortgage only on personal property.
◍ Net Income Ratio(NIR).
Answer: Net operating income divided by effective gross income
◍ what are the three basic components of the capitalization formula.
Answer: IRV
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Gross Lease.
Answer: the landlord is required to pay all operating expenses associated
with the real estate.
◍ Effective Gross Income (EGI).
Answer: obtained after determining the potential income for the property
◍ Substitution.
Answer: A property's maximum value tends to be set by the lowest cost or
price at which another property of equivalent utility can be acquired.
◍ List nine factors influencing investors decisions.
Answer: Safety of the investmentLiquidity of the investmentSize of the
investmentUse as collateralTimeManagementAppreciationIncome tax
advantagesLeverage
◍ Mortgage.
Answer: most common type of financing for real estate.
◍ What does IRV stand for?.
Answer: Income, Rate, Value
◍ Misc. Income.
Answer: some misc income could be parking fees, vending machines, coin
operated laundries, etc
◍ A corner lot in a business district is used as a parking lot. The monthly gross
income earned by the property is $12,500 and the monthly expenses are
$2,500. The monthly net income in $10,000. The owner's required rare of
, return for this type of property is 8% per year. What is the value of this
property?.
Answer: $10,000 x 12=$120,000.08 x v ( value)$120,000/08=$1,500,00
◍ Contract Rent.
Answer: Rent the the tenant is paying according to the lease in effect at the
time of appraisal or analysis.
◍ Amortized Mortgage.
Answer: Fixed rate mortgage permanent loan in which the sum of the
principal and interest payments remains fixed throughout the term of the
loan.
◍ What kind of expenses are capital improvements?.
Answer: Improper Expenses.
◍ Contribution.
Answer: the value of a component of real estate can be measured by the
amount it contributes to net operating income because net operating income
can be capitalized into value.
◍ Effective Tax Rate.
Answer: Reflects the relationship between the real estate taxes and the value
of the property.
◍ How to get Net Operating Income.
Answer: Protentional Gross income(PGI)-Vacancy& Collection
Loss+Miscellaneous Income= Effective Gross Income(EGI)- Allowable
Expenses= Net Operating Income(NOI)
◍ Chattel Mortgage.
Answer: a mortgage only on personal property.
◍ Net Income Ratio(NIR).
Answer: Net operating income divided by effective gross income
◍ what are the three basic components of the capitalization formula.
Answer: IRV
