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Anticipationm-
mCORRECTmANSWERmValuemismcreatedmbymthemexpectationmofmbenefitsmtombemderivedminmthemf
uture
Substitutionm-
mCORRECTmANSWERmthemprices,mrents,mandmratesmofmreturnmofmpropertymtendmtombemsetmbymt
hemcurrentmprices,mrentsmandmratesmofmreturnmformequallymdesiremablemsubstitutemproperties.
Contributionm-
mCORRECTmANSWERmthemvaluemofmamcomponentmofmrealmestatemcanmbemmeasuredmbymthemam
ountmitmcontributesmtomnetmoperatingmincomembecausemnetmoperatingmincomemcanmbemcapital
izedmintomvalue.
MarketmValuem-
mCORRECTmANSWERmmeansmthemmostmprobablempricemwhichmampropertymshouldmbringminmamc
ompetitivemandmopenmmarketmundermallmconditions.
5mAnalysismQuestionsmformInvestorsm-m-mCORRECTmANSWERm1.mHowmmuchmitmcost?
2.mHowmmuchmwillmImgetmback?
3.mWhenmwillmImgetmitmback?
4.mWhatmaremthemrisk?
5.mWhatmaremsomemcompsmROImcomparedmtommyminterestedmproperty?
, Leveragem-
mCORRECTmANSWERmborrowingmofmfundsminmhopesmofmearningmamgreatermreturnmthanmthemco
stmofmthemborrowedmfunds.mThismamountmcanmbembemnegative,mpositive,mormneutral.
Mortgagem-mCORRECTmANSWERmmostmcommonmtypemofmfinancingmformrealmestate.
JuniormMortgagem-mCORRECTmANSWERmtypicalmamsecondmmortgage
ChattelmMortgagem-mCORRECTmANSWERmammortgagemonlymonmpersonalmproperty.
AmortizedmMortgagem-
mCORRECTmANSWERmFixedmratemmortgagempermanentmloanminmwhichmthemsummofmthemprincip
almandminterestmpaymentsmremainsmfixedmthroughoutmthemtermmofmthemloan.
Fourmfactorsmtomcapturemoverallmyieldmratem(Yô)m-m-mCORRECTmANSWERm1.mSafemrate
2.mRiskmRate
3.mRatemformnon-liquidity
4.mRatemformManagement
RecapturemRatem-
mCORRECTmANSWERmProvidesmformthemreturnmofmtheminvestmentminmthemwastingmportionmofmt
hemassets.
EffectivemTaxmRatem(ETR)m-
mCORRECTmANSWERmReflectmthemrelationshipmbetweenmthemrealmestatemtaxesmandmthemvaluem
ofmthemproperty.
IncomemApproachm-
mCORRECTmANSWERmOnemofmthemthreemapproachesmtomvalueminmwhichmthemappraisermderives