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IRR Internal Rate of Return
The IRR, NPV, MIRR and DCF stand for?
The time period in years used to carryout the analysis.
In carrying out long term real estate investment or discounted cash flow analysis the "Analysis Period" refers to:
True or False?
False. The Cap Rate and the IRR likely result in different estimates of value.
the Investor's desired return or discount rate.
the RISK.
When carrying out real estate investment analysis you look at the financial "Reward" such as the Internal Rate of Return (IRR) and the Net Present Value (NPV) AND......?
The price has to be reduced by \$329,000
If the investor's discount rate or desired return is 11% and the Net Present Value (NPV) is \$<329,000> how much does the purchase price have to be reduced to get the return of 11%?
What does the term "Capital Expenditure" mean?
A capital expenditure is a major, one off expenditure such as replacing the roof or a major upgrade to the building or the interior and generally depreciated for tax purposes.
What does the 'Re-investment assumption" refer to when calculating the Internal Rate of Return (IRR)?
The re-investment assumption refers to how positive and negative (losses) cash flows are re-invested.
What is the Internal Rate of Return (IRR)?
The Internal Rate of Return (IRR) is also 9.70%. For an even cash flow the interest rate and the Internal Rate of Return (IRR) are the same.
3 150,000...unven cash flow
We like to base the discount rate that:
d0 The average return for a large REIT (Real Estate Investment Trust)
The Internal Rate of Return (IRR) is generally "Higher" or "Lower" than the Cap Rate?
Under normal circumstances the Internal Rate of Return (IRR) is higher than the Cap Rate.
If the purchase price is reduced by \$680,000 the Internal Rate of Return (IRR) will change from 7.95% to ...?% and the Net Present Value (NPV) will be \$...?
Under the following conditions:
Under what conditions does the Cap Rate come close to being equal to the Internal Rate of Return (IRR)?
Easement
A right that goes with ownership of real property; usually transferred with the property, but may be sold separately. (A nonpossessory right to use another's property in a manner established by either express or implied agreement.)
Fixture
An item of personal property that may or may not be attached to real property, but is closely associated with real property in such a way that it has legally, and is intended to become part of real property.
Real property
A right and privilege associated with land, realty, and the fixtures, thereto, with a longer or event perpetual duration.
A revocable right to use real property for a specific purpose for a limited period of time.
Joint Tenants
Property held by 2 or more individuals (not corporation), with right of survivorship.
Tenants in Common
Property held by 2 or more persons, with no right to survivorship.
Community Property
Generally includes all property acquired by either spouse during the time of the marriage.
Leasehold Estate
A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a le…
Personal Property
Personal property is movable, transferable in the physical sense, and durationally limited.
Freehold Estate
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
Reconciliation
Combining all three appraisal approaches to determine an indicated value
Diminishing returns
Results from building in excess of the value of the neighborhood
Substitution
What principle appraiser uses to determine maximum value by comparing equally desirable substitutes
Scarcity
Essential to creating value
capitalization
used to determine the value of real estate or other property; transferring items purchased for use over an extended period of time from the cash basis income statement and recording them as assets on the balance sheet
Assemblage
The act of combining contiguous property to increase the value of the combined property
Physical deterioration
A cracked foundation
Amenities
Value is enhanced by a home's proximity to a beautifully shaded park
External Obsolescence
Diminished value due to the airplane landing routes over a neighborhood
Functional Obsolescence
A three bedroom two-story home with only one bath
CMA
Reporting tool to help agents determine a price range for a property
URAR
The universal appraisal report
Progression
Phenomenon that happens when buying the least expensive home in the most expensive neighborhood
Arm's length
Sales not influenced by unusual circumstances used to determine the market value of a property
Land
In the cost approach this is added back after subtracting depreciation from replacement cost new
Comparables
A name for sold homes used in a CMA
Plottage
The theory that greater utilization or efficiency of contiguous property increases value
GIM
Sold price divided by annual income
Contribution
Dollar value of any house component measured probably sales price by it's worth using "paired sales" in an open market
GRM
Sold price divided by monthly rents