Property Valuation
An appraiser for a NJ income property uses a 5% vacancy factor. If the gross potential rent is $180,000, what is the vacancy allowance?
A$7,200
B$9,000✓ Correct
C$10,800
D$12,000
Explanation
Vacancy allowance = $180,000 × 0.05 = $9,000.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AppraisalA 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.
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