What is 'vacancy rate' and how does it affect property value?
Why The percentage of rental units that are unoccupied; higher vacancy rates reduce effective gross income and thus property value Is Correct
Answer B: The percentage of rental units that are unoccupied; higher vacancy rates reduce effective gross income and thus property value
Exam Tip: Property Management
Property management questions cover landlord-tenant law, security deposits, and maintenance responsibilities. Know the differences between gross, net, and percentage leases.
People Also Study
Related California Questions
- A commercial property has an annual NOI of $105,600 and comparable properties are selling at a 7% cap rate. What is the property's value using the income approach?Real Estate Math
- A property generates an NOI of $60,000. Comparable properties sell at a 5% cap rate. What is the indicated value using the income approach?Property Valuation
- A property's effective gross income is $108,000 per year. Operating expenses are $42,000. At a 7% cap rate, what is the estimated value?Real Estate Math
- A rental property has a monthly gross income of $4,200 and a vacancy rate of 5%. What is the effective gross income per year?Real Estate Math
- An income property has an NOI of $84,000. Comparable properties are selling at a 7% cap rate. What is the estimated value?Real Estate Math
- A property generates annual rental income of $96,000. An appraiser uses a gross rent multiplier (GRM) of 13 to estimate value. What is the indicated value?Property Valuation
- The income approach to value is most appropriate for:Property Valuation
- The income approach to value is most commonly used for:Property Valuation
Key Terms to Know
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →