A client asks you about the average income in a particular neighborhood. You do a little research and you find three different answers to that question: $1.2 million, $135,000, and $40,000. Which value would you give to your client, and why?
None of them, because they can't all be true.
The amount of $1.2 million, because that will draw the most interest to listings in the neighborhood.
The amount of $135,000, because that one seems the most likely.
The amount of $40,000, because you don't want to over-state anything.
Let's try a quick calculation. A subject property has a potential gross income of $350,000. The effective gross income is $262,500. After constructing the operating statement, an appraiser arrives at a figure of $138,000 for total expenses. What's the NOI for this property?
$350,000 - $262,500 - $138,000 = -$50,500
$262,500 - $138,000 = $124,500
$350,000 - $138,000 = $212,000
$350,000 - $262,500 = $87,500
Nicodemus is a real estate licensee who's listed a property for friends Jackie, Geraldine, and Jo. That is, the women were friends when they purchased the property together. At the time, Jackie put up half the money, while Jo and Geraldine each put up one-quarter of the money, making their co-ownership portions 50%, 25%, and 25%, respectively. Now, however, they can't wait to be rid of each other. (We won't go into the sordid details.) What type of ownership will Nicodemus warn the appraiser is in place here?
Estate in severalty
Tenancy in common
Tenancy by the entirety