Property Evaluation & Analysis Flashcards
7 cards from real CLP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Evaluation & Analysis flashcards as text
A property's debt service coverage ratio (DSCR) is 1.15. What does this indicate to a leasing professional about the asset's financial health?
Answer: The property generates 15% more NOI than required to cover debt payments
A DSCR of 1.15 means NOI is 115% of the debt service obligation, indicating the property generates 15% more income than needed to service its debt.
When evaluating rental comps for a new property, which adjustment is most appropriate if a comparable property offers free covered parking while your property does not?
Answer: Subtract the value of covered parking from the comparable's effective rent
When a comp has a superior amenity your property lacks, subtract that amenity's value from the comp's rent to establish a true apples-to-apples comparison.
A 300-unit property has annual gross potential rent of $3,600,000. Vacancy and credit loss total $288,000, and effective gross income is $3,312,000. What is the vacancy and credit loss percentage?
Answer: 8%
Vacancy and credit loss % = $288,000 / $3,600,000 = 8%.
Which trend in a property's unit mix analysis would most concern a leasing professional evaluating long-term demand?
Answer: High concentration of studio units in a market with growing average household size
A high concentration of studios in a market where household sizes are growing indicates a mismatch between supply and shifting demand, threatening future occupancy.
A leasing professional uses the income approach to estimate value. Which input change would have the GREATEST positive impact on estimated value?
Answer: Reducing the cap rate from 6% to 5%
Cap rate compression (lower cap rate) dramatically increases value because value = NOI / cap rate — a 1% decrease in cap rate on $200K NOI increases value by over $600,000.
What is the primary difference between a property condition assessment (PCA) and a standard property inspection during acquisition due diligence?
Answer: A PCA provides a comprehensive evaluation of capital needs with cost estimates; an inspection is a more limited review
A PCA (also called a building condition assessment) is a thorough third-party report estimating current and future capital expenditure needs, going beyond a standard inspection.
A leasing professional is asked to evaluate the market penetration rate for a proposed 200-unit development. If the submarket has 5,000 renter households and the project captures 4%, what does this confirm?
Answer: The 4% capture rate equals 200 units, confirming the project is appropriately sized
4% of 5,000 = 200 units, meaning the project needs to capture exactly 4% of submarket renters — a relatively low and typically achievable penetration rate.