Principles of real estate II Champions Flashcards

Principles of real estate II (Champions) Flashcards chronological agethe actual age of the property in years net leaselease in which the tenant pays rent plus taxes, insurance, repairs, utilities, etc principle of supply and demandwhen demand is high and supply is short, prices go up - and vice versa SIORSociety of Industrial and Office Reators characteristics of valueDUST; demand, utility, scarcity, transferability termthe duration of the agreement IRV formulapart of income capitalization. Value, Income, Return.various equations can calculate what investor is looking for requirements of a valid leasecompetent parties, let and take agreement, adequate consideration, legal purpose, description of property.

NOTE: leases for more than one year must be in writing

principle of competitionthe absence of competition will cause prices to increase in the marketplace. Increased competition will bring prices down.most important aspect of principle of contributioncost does not equal value (for example...swimming pool) effective ageestimate of age based on the condition of the property URARUniversal Residential Appraisal Report; Fannie Mae 1004 escheatthe right of a government to take an individual's land if he or she dies without a will or heirs preventive maintenanceservicing a property and its equipment in order to prevent mechanical failure and keep property values high condemnationthe action of government seizure of land for the good of the public income capitalizationused in commercial transactions.primary mortgage marketthe market in which borrowers and mortgage lenders come together to create and negotiate terms of a mortgage transaction.REITreal estate investment trust; created by Congress in 1960 periodic tenancylease that renews itself for like periods of time automatically tenancy at willtenant occupies real estate with the permission for an uncertain or unspecified amount of time; agreement can be terminated on short notice.limited appraisala type of appraisal review. some lenders accept this drive-by type of review for low LTV or low risk loans.cash flow reportlists all cash that came into and all expenses incurred by a property during the reporting period back ratiosum of regular debt plus house payment tenancy at suffrancewhen a lease ends and the tenant doesn't leave

gross scheduled incomepotential income of a property in the amount of rent that would be collected in a year external obsolescencethe loss in value of a property caused by factors outside the property itself discount ratethe interest rate a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis.VLBhousing assistance program; Texas Veterans Land Board landlord and tenant actdefines the rights and obligations of both landlord and tenant in the leasing of residential and commercial properties principle of substitutionthe value of a commodity if influenced by the cost of acquiring a substitute or comparable item.principle of increasing and decreasing returns when the value added by an improvement exceeds the cost...do not over improve.GRMGross Rent Multiplier. Sales Price ÷ monthly rent adverse possessiontitle acquired through hostile, actual, continuous occupation of the land fo the statutory period ad valorem taxesbased on the assessed value of the property and the existing tax rate.principle of regressionpresence of lower-priced properties in the area will cause a decline in the value of the subject property principle of changeforces acting on a parcel of land are always affecting the value of the land expirationwhen a lease agreement comes to the end of the lease period and terminates real estate investment syndicatesmay be organized as limited or general partnerships Functional obsolescenceRefers to the loss in desirability of the style, layout or function of an element of a property over time hereditamentany property, real or personal, that is capable of being inherited legacymoney that is inherited USPAPstandards that have been established by the Appraisal Standards Board of the Appraisal Founation economic rentthe rent the property could currently command on the open market appraisalan appraiser's opinion of value real estate investment syndicatemethod of raising funds for the purchase of real estate assessed valuevalue set on the property for tax purposes. never a reliable estimate of market value ABRAssociated Board of Realtors - helpful for residential buyers' agents embodied energythe sum of energy used during the life cycle of a product front ratiohouse payment as % of income RMLOResidential Mortgage Loan Originator (term mandated by the SAFE act)

graduated leaselese in which payments begin at a lower, fixed rate but gradually increase as the lease matures. Type of lease often used to attract tenants to facilities that might be hard to rent during tough economic times LEEDLeadership in Energy and Environmental Design; a building certification for properties that are "green" BOMA's major concern...advocacy on the part of building owners and managers IREMInstitute of Real Estate Management; affiliate of NAR and offers educational programs principle of contributionsuggests the value of a property is equal to the sum of the contributory value of each of its components. most important aspect is that cost does not equal value highest and best usethe legal use for property that gives the greatest return in money and/or amenities tax on sale of personal residencetax-free capital gain of up to 250k if they lived there 2 out of the last 5 years. Married limit is 500k. Unlimited number of times.types of appraisal reviewsdesk review and field review` percentage rentall or part of the rental is based on the gross receipts of the tenant's business sales comparison approachestimate of value by examining and comparing actual sales of comparable properties REMICreal estate mortgage investment conduits. purchases "pools" or mortgages. two largest are Freddie Mac and Fannie Mae contract rentthe renal income as stipulated by the parties in a lease Sales comparisonbest indicator of value for existing properties ICSCInternational Council of Shopping Centers eminent domainthe right of the government to take private land for public use taxationthe government's right to tax real estate CRACommunity Reinvestment Act ECOAEqual Credit Opportunity Act; passed in 1974, ensures equal chance for credit.appreciationpassive increase in the value of a parcel due to market forces leverageusing borrowed money to make money USDAgovernment rural loan CCIMcertified commercial investment member (part of NAR).Gross Rent Multiplierpart of income approach, used if there are a lot of rental properties in the area.Fannie Mae 1003uniform residential loan application gross leaselease where the landlord pays regular charges such as taxes, insurance, utilities and repairs - the tenant only pays rent

BOMABuilding Owners and Managers Association; an organization that advocates on the part of building owners and managers PMIdefault insurance on a conventional loan bootadditional capital or property included in a transaction to even out the exchange market valuethe most probable pice a property should bring in a competitive and open market under all conditions requisite to a fair sale.reconciliationfinal step in the appraisal process, in which the appraiser weights the estimates of value from sales comps, cost and income approaches to arrive at a final estimate of market value of the subject property.mortgage lending activitiesorigination, loan processing, underwriting, close, fund, servicing CFPBConsumer Financial Protection Bureau; signed into law in 2010 loan-to-value ratio (LTV)the percentage of value or sales price that a lender is willing to finance principle of anticipationthe purchase price is affected by the expectation of future appeal and benefits management agreementthe property manager's employment contract with the owner field reviewa type of appraisal review. many lenders, especially high LTV loans, will order a field review of the appraisal.Independent third-party appraiser will review the report, then verify the information.VA loangovernment guaranteed loan cost approachan estimate of value based on current construction costs, less depreciation, plus land value income approachthe process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life principle of progressionpresence of higher-priced properties in the area will cause an increase in the value of the subject property lease for yearsa lease with definite beginning and ending dates assignmentthe transfer of a tenant's rights and liabilities to another desk reviewa type of appraisal review. reviews cover a checklist of items as they analyze the appraisal report lessorlandlord or owner deferred maintenancedeterioration of a property due to delayed maintenance principle of conformityvalue is maximized when there is a reasonable degree of homogeneity in a neighborhood