CCIM cheat sheet

NOI = Potential Gross Income − Vacancy & Collection Loss + Other Income − Operating Expenses; it excludes debt service, capital expenditures, depreciation, and income taxes.

Value = NOI ÷ Cap Rate, and Cap Rate = NOI ÷ Sale Price; the cap rate is an unlevered, going-in yield.

Effective Gross Income = Potential Gross Income − Vacancy & Collection Loss + Other Income.

Operating Expense Ratio = Operating Expenses ÷ Effective Gross Income.

DSCR = NOI ÷ Annual Debt Service; many lenders require 1.20–1.25 or higher before funding.

Debt Yield = NOI ÷ Loan Amount; it is independent of interest rate and amortization and is used to size loans.

Break-Even Occupancy = (Operating Expenses + Debt Service) ÷ Potential Gross Income.

Loan (mortgage) constant = Annual Debt Service ÷ Loan Amount; positive leverage exists when the cap rate exceeds the loan constant.

Equity Dividend Rate (cash-on-cash) = Before-Tax Cash Flow ÷ Equity Invested.

Vacancy Rate = Vacant Rentable SF ÷ Total Rentable SF; economic vacancy adds concessions and collection loss and therefore exceeds physical vacancy.

Net Absorption = Change in Occupied SF over a period; a new building leased to a tenant relocating within the same market does not create net absorption.

Market Rent is the rent achievable today under current market terms; Contract Rent is the rent actually stated in an existing lease.

Rent-to-Sales Ratio = Occupancy Cost ÷ Gross Sales; retail tenants commonly target roughly 8–12% depending on retail type.

Situs is the value created by a site's spatial relationships and accessibility; it cannot be duplicated by building materials or design.

Economic Base Analysis splits local employment into base (export) and service sectors; a location quotient above 1.0 indicates export concentration.

A Marketability Study estimates the price or rent a specific property can achieve within a set time; a Feasibility Study tests whether a proposed use is justified.

Market structures: perfect competition (many sellers, homogeneous product), monopolistic competition (differentiated product), oligopoly (few sellers), monopoly (one seller).

Demand for space is derived demand - it flows from demand for the goods and services produced in that space.

User Decision Analysis evaluates occupancy alternatives for an owner-occupant, such as lease vs. own, build vs. buy, or renovate vs. relocate.

Decision rule: select the alternative with the lowest present value of total after-tax occupancy cost, including acquisition, financing, operating, and disposition cash flows.

Under ownership the owner deducts mortgage interest, property taxes, and depreciation but not principal repayment; a lessee deducts rent as an operating expense.

The user's discount rate should reflect its after-tax cost of capital or opportunity cost, not the property's investment cap rate.

A sale-leaseback converts owned real estate into cash plus a rent obligation; the user gains capital and a deductible rent expense but loses depreciation and appreciation.

Incremental analysis isolates the cash flow differences between two occupancy alternatives rather than comparing gross totals.

Functional utility measures how well a space supports the user's operations; deficiencies raise effective occupancy cost even when the face rent is unchanged.

Flexibility has value: a shorter lease term or expansion option reduces relocation risk for a user whose space needs are uncertain.

NPV = Present value of all after-tax cash flows discounted at the required return, minus the equity invested; accept when NPV > 0.

IRR = the discount rate that sets NPV to zero; accept the project when IRR exceeds the investor's required return.

Equity Multiple = Total Distributions (annual cash flow + net reversion) ÷ Equity Invested; it ignores the timing of cash flows.

Taxable Income = NOI − Interest − Depreciation − Amortized Financing Costs; Tax Liability = Taxable Income × Marginal Tax Rate.

Straight-line depreciation is 27.5 years for residential income property and 39 years for nonresidential income property.

Gain on Sale = Net Sale Price − Adjusted Basis, where Adjusted Basis = Original Cost + Capital Improvements − Accumulated Depreciation.

Unrecaptured Section 1250 gain (prior depreciation) is taxed at up to 25%; remaining gain is taxed at capital gains rates.

A Section 1031 exchange defers tax when like-kind replacement property is identified within 45 days and acquired within 180 days; cash boot received is taxable.

Positive leverage occurs when the property's return exceeds the cost of debt, so the equity return rises as additional debt is added.