Market Analysis & Valuation Flashcards

Which data source provides the most reliable information for completing a market rent survey?

Answer: On-site visits and direct verification with competing properties

On-site visits allow direct confirmation of actual asking rents, concessions, amenities, and unit conditions that online sources may not accurately reflect.

A competing property offers one month free on a 12-month lease at $1,300/month face rent. What is the concession-adjusted effective monthly rent?

Answer: $1,191.67

$1,300 × 11 paid months ÷ 12 total months = $1,191.67 effective monthly rent.

How does 'economic vacancy' differ from 'physical vacancy'?

Answer: Economic vacancy also includes concession periods and non-revenue units like models

Economic vacancy captures all income loss including free-rent concessions, model units, and employee units, not just physically empty units.

Which market condition would most strongly support increasing asking rents?

Answer: Absorption rates consistently exceeding new unit deliveries

When absorption exceeds new supply, occupancy rises and landlords gain pricing power to increase rents.

In market analysis, 'lease-up velocity' refers to:

Answer: The rate at which vacant units are leased, used to forecast stabilization timelines

Lease-up velocity measures how quickly a property fills its vacant units, which determines when a property reaches stabilized occupancy.

When evaluating competitive properties in a market survey, 'concessions' should be:

Answer: Subtracted from face rent to calculate each property's true effective rent

Concessions must be deducted from face rent to derive effective rent, enabling accurate comparison of true pricing across competitors.

A revenue management system used for apartment pricing primarily optimizes rents based on:

Answer: Real-time supply, demand, and occupancy data across the submarket

Revenue management systems use real-time data on occupancy, traffic, and competitor pricing to dynamically optimize rental rates.