How to get the After Tax Cash Flow (ATCF)
a) Potential gross income (PGI)
- Vacancy and credit loss (VCL)
Effective gross income (EGI)
- Operating expenses (OE)
Net operating income (NOI)
- Debt service (DS) (This includes Principal & Interest)
The grantor is the seller, or giver.
The grantee is the buyer, or receiver
The mortgagor is the buyer, the one having to pay
The mortgagee is the seller, the one receiving payment f
FIRE 316 ~ Real Estate Finance ~ FA 9th & 10th Editions ~ Problem Set #1
Recommended reading and suggested sample problems: Floyd and Allen, 9th Ed., Chapter 17, pages 392405 (or, 10th Ed., Chapter 17, pages 358-371). (Note: This is not the full chapter.)
Homework assignment 1
1) What is deductive reasoning?
Also called top-down logic, deductive reasoning when you state something you
believe to be true, then try to prove it with a series of steps.
This makes me think about scien
1. The ability of land to generate income will not change over time, because land is
2. The highest and best use of land is not necessarily the use of land that will yield the
greatest social benefit result in the greatest economic
Chapter 19 RE Investment Analysis - The "DCF" Model (9th Edition, p. 439-446 & 10th Edition, p. 398-416)
Cash flow from operations
Cash flow on reversion
Types of estates
a) Freehold estate
Defeasible fee or qualified fee
fee simple subject to termination
fee simple interest for life
b) Non-Freehold (possessory & non-posessory)
c) Possessory estate
Models of land use activity (growth)
a) Von-Thunen concentric circle allocation (1800s)
Differences in land use attributed entirely to differences in
transportation costs or location (distance)
b) Axial model of urban growth
PRINCIPLES OF REAL ESTATE
FIRE 316 Spring 2014
Instructor: David H. Downs, Ph.D.
Professor and Alfred L. Blake Chair
Director, The Kornblau Institute
Office: Suite B4106, Snead Hall
Office Phone: 804-828-2410
(email is the best option)
Office email: dhdow
Problems from Floyd & Allen, Real Estate Principles (10th edition)
Chapter 9, page 203
3. Based on the most widely accepted definition, what is market value?
Market value: The most probable price which a property should bring in a competitive and open
a) Fixed-Rate Mortgage (FRM)
In a fixed-rate mortgage, the interest rate is fixed at the time of
b) Adjustable Rate Mortgage (ARM)
In an adjustable rate mortgage, the interest rate periodically
adjusts based on an index whi
Bundle of Rights Concept
a) Rights in realty are exchanged. The real estate (land), itself, cannot be
transferred because of its immobility.
b) The basic rights of ownership include:
Possession, control, enjoyment, disposition
1. An overreaction by developers in response to a change in demand typically results in:
A decrease in values.
2. Which is NOT generally considered to be an export activity?
3. Almost all colonial cities in the United States (e.g., Cha