1. The Student Handbook to T HE A PPRAISAL OF R EAL E STATE 1 Chapter 21 Income and Expense Analysis

2. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 2 Estimating and Adjusting Market Rent  Lessee and lessor are typically motivated.  Both parties are well-informed.  A reasonable time is allowed for exposure.  The rent is in terms of cash in US dollars.  The rental amount represents normal consideration for the property leased, unaffected by special fees.

3. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 3 Income and Expense Data  Rent  Rent Concessions  Division of Expenses  Renewal Options  Expense Caps  Escalation Clauses  Expense Recovery Clause  Purchase Options  Escape or Kick-Out Clause  Continued Occupancy Clause  Tenant Improvement Clause  Non-Compete and Exclusive Use Clauses

4. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 4 Developing Reconstructed Operating Statements Estimating Potential Gross Income  From Comparable Leases  From the Current Subject Leases  From Subject History

5. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 5 Table 21.1 Lease Comparison Grid

6. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 6 Estimating Vacancy and Collection Losses  From Comparables  From History Estimating  Operating Expenses Using Comparables  Operating Expenses Using Property History  Reserves for Replacement Using Contractors’ Estimates  Tenant Improvements Expense  The Net Income Ratio

7. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 7 Table 21.2 Income Capitalization Approach Calculations for Eight-Unit Property

8. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 8 Problems Suggested solutions begin on page 365.

9. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 9 Problem 1

10. Student Handbook to T HE A PPRAISAL OF R EAL E STATE Chapter 21 10 Problem 2