Exam 13: The Income Approach

Rent for the manager's unit should be included in the rent forecast.

A step-up lease is a lease on a walk-up apartment.

Small income properties are bought and sold only for their tangible amenities.

Operating expenses should include all owner-related expenses.

In income property appraisal, the gross income multiplier is often considered part of the sales comparison approach.

If you subtract vacancy and credit loss from gross scheduled income, you arrive at the effective gross income.

Gross income multipliers normally increase with a decrease in the operating expense ratio.

A 5% savings account that has just paid a $500 annual dividend is worth about $25,000.

Market rent can be defined as the potential gross rent in an open market.

Expenses that are not classified as either variable or fixed should be omitted.