Question

10.31 Lessen 10: The Income Approach ASSIGNMENT 10, continued rent is the rental 12. Complete the following statement: contract rent is the actual rental income specified in a lease and market income that a property would most probably command in the open market. (1) Market, contract (2) Effective, potential (3) Contract, market T4) Net effective, net potential 13. A reconstructed operating statement should include: (1) additions to capital. (2) income tax (3) book appreciation. @ management charges. 14. Which of the following statements is TRUE? (1) The rent for owner-occupied space is estimated at contract rents. (2) The rent for owner-occupied space is estimated at market rents. (3) The rent for janitor-occupied space provided free is excluded from the reconstruction of the expense statement (4) The rent for janitor-occupied space provided free is estimated at contract rents. 15. When can overall capitalization rates be accurately derived from comparable sales? (1) When the income and expenses of the subject property and comparable properties are estimated on the same basis (2) When market expectations about the resale prices, tax benefits, and holding periods are similar (3) When the subject and comparable properties are affected by the same financing terms and market conditions. (4) All of the above 16. The income from renting garage space in an apartment building is: (1) deducted from effective gross income. (2) included as escalation come potential gross income. º included as other income in potential gross income. (4) deducted from potential gross income. 19. An allowance for vacancy and collection loss is estimated as a percentage of: (1) potential gross income. (2) total operating expenses. (3) net operating income. (4) effective gross income. 18. The anticipated net income that remains after deducting all operating expenses but before mortgage debt services is deducted is called: (1) pre-tax cash flow. (2) effective gross income. (3) potential gross income. net operating income. Assignment continues on the following page Copyright 2018 by the UBC Real Estate Division

Answer 1

All the options marked are correct

12) 3 contract , market

13) 4 management charges

14) 2 The rent for owner occupied space is estimated as market rents

15) 4 All of the above

16) 3 included as other income in potential gross income

17) 1 potential gross income

18) 4 net operating income