CLP Market Analysis & Valuation 2

Question 1

What is the correct formula for calculating Net Operating Income (NOI)?

Accepted Answer

Gross Potential Income minus Vacancy Loss minus Operating Expenses

Answer

Gross Potential Income plus Operating Expenses minus Vacancy Loss

Answer

Total Revenue minus Debt Service

Answer

Effective Gross Income minus Capital Expenditures

Question 2

A property generates $150,000 in NOI and is valued using a 6% capitalization rate. What is the estimated property value?

Accepted Answer

$2,500,000

Answer

$900,000

Answer

$1,500,000

Answer

$900,000

Question 3

Which valuation approach is most appropriate for income-producing multifamily residential properties?

Accepted Answer

Income approach

Answer

Cost approach

Answer

Sales comparison approach

Answer

Replacement cost approach

Question 4

The Gross Rent Multiplier (GRM) is calculated by dividing:

Accepted Answer

Property sale price by annual gross rental income

Answer

Annual NOI by property value

Answer

Monthly rent by property price

Answer

Operating expenses by gross income

Question 5

Which factor would most directly cause capitalization rates to INCREASE in a market?

Accepted Answer

Rising interest rates and increasing economic uncertainty

Answer

Declining interest rates

Answer

Rising investor demand for multifamily properties

Answer

Strong local employment growth

Question 6

When comparing rental comps, a positive adjustment is made to a comparable property when the comparable:

Accepted Answer

Lacks a feature that the subject property has

Answer

Has a superior amenity the subject lacks

Answer

Is located in a more desirable submarket

Answer

Has a larger average unit size than the subject

Question 7

In the income approach, 'Effective Gross Income' (EGI) is best defined as:

Accepted Answer

Gross Potential Income minus vacancy losses and credit losses

Answer

Total potential rental income assuming 100% occupancy at market rents

Answer

Net Operating Income before deducting operating expenses

Answer

Gross income remaining after debt service payments