What is 'reversion value' in a Delaware income property DCF analysis?
Why The projected sale price (resale value) of the property at the end of the investor's holding period, one of the cash flows in a DCF analysis Is Correct
Answer B: The projected sale price (resale value) of the property at the end of the investor's holding period, one of the cash flows in a DCF analysis
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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