TX Prin. of Real Estate TWO Ch. Two 2.5.2

Net Operating Income, or NOI for short, is a formula those in real estate use to quickly calculate profitability of a particular investment. NOI determines the revenue and profitability of invested real estate property after subtracting necessary operating expenses.

(See Other Side)

Incurable depreciation

.............. depreciation cannot be fixed at an economically feasible cost?

Economic obsolescence

A loss in value due to factors away from the subject property but adversely affecting the value of the subject property is known as...?

Economic Obsolescence

A loss in value due to factors away from the subject property but adversely affecting the value of the subject property.

Functional Obsolescence

A loss of value due to adverse factors from within the structure which affect the utility of the structure, value and marketability.

Gross rent multiplier

A number which, times the gross income of a property, produces an estimate of value of the property.

Income approach

An investor is in the process of purchasing an office building. The bank providing the mortgage for the property requires an appraisal to be done. Which of the following appraisal methods will the appraiser most likely use to determine the value of the office building...?

Physical Deterioration

Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements; termed curable and incurable.

Depreciation

Loss of value of property brought about by age, physical deterioration or functional or economic obsolescence.

Net operating income

The income approach determines value by applying a capitalization rate to the...?

Physical deterioration

The loss in value brought about by wear and tear, disintegration, and use and actions of the elements is known as...?

Depreciation

The loss of value of a property brought about by age, physical deterioration or functional or economic obsolescence is referred to as...?

Economic Life

The period over which a property will yield a return on the investment over and above the economic or ground rent due to land.