Property Valuation
The 'band of investment technique' in the income approach is used to:
AA. Analyze the performance of different investment property sectors
BB. Develop a capitalization rate from the weighted average of mortgage and equity requirements✓ Correct
CC. Estimate the value of a music venue or entertainment property
DD. Calculate the return on equity portion only
Explanation
The band of investment technique develops a capitalization rate by weighting the mortgage constant (debt service requirement) and the equity dividend rate (equity return requirement) by their respective portions of the investment.
Related Georgia Property Valuation Questions
- A discounted cash flow (DCF) analysis differs from direct capitalization in that DCF:
- In the sales comparison approach, a 'time adjustment' is made when:
- Effective age in appraisal refers to:
- When appraising a property in a depressed market with few sales, an appraiser may place more weight on the:
- Which type of depreciation in the cost approach is considered incurable because it comes from outside the property?
- Under the income approach, 'market rent' differs from 'contract rent' in that:
- The 'cost to cure' method of depreciation estimates functional obsolescence by calculating:
- A property that would sell for more in pieces than as a whole exhibits:
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