Real Estate Financing

  1. What is imputed rent and its formula?
    The value of consumption services obtained by owning one's house rather than having to pay rent

    • Expected Return = D + G – C,
    • where

    • D = imputed rental dividend,
    • G = inflation-adjusted growth in home value, and
    • C = costs (insurance, property taxes, and maintenance)
  2. What are qualitative reasons that affect buy vs. rent
    • 1) how long you are staying in a location
    • 2)
    • 3) Ask someone, please
  3. What are the types of leases
    Flat Rent, Step-Up Rent, Indexed Rent, and Rents dependent on performance,
  4. What is effective rent and how to calculate it.
    • A single measure that can be used in comparing leasing alternatives.
    • To calc this you must calc the pv of the expected net rental stream. Then calc a equivelant level of annuity equal to the calc rent.
  5. Valuation of Income Producing Properties
    GIM(Gross Income Mult.) = sales price/gross income

    • Cap Rate = NOI/ price
    • *Cap Rate does only insures that you are paying a competitive price for the home.
  6. How to calculate the load factor of a building?
    Ex. There are 4 tenants and 20,000 sqft of space. There are 4,500 sqft/tenant, which leaves 2,000 sqft for common space. The load factor would be 20,000/18,000=1.111
  7. What is DCR?
    DCR is Debt Coverage Ratio. It is attained by dividing your NOI(usually 1st year)/The mortgage.
Card Set
Real Estate Financing
Study Guide for Exam II