Income Approach
A method of appraising property based on the properties anticipated future income. Once the net income is established, it is then divided by the estimated capitalization rate to arrive at a fair market value.
Interim Financing
A loan, including a construction loan, used when the property owner is unable or unwilling to arrange permanent financing. Generally arranged for less than 3 years, used to gain time for operations and or market conditions to improve.
Index
A published interest rate, such as prime rate, LIBOR, T-Bill rate or the 11th District COF. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns.
Ingress and Egress
Applied to easements, meaning the right to go in and out over a piece of property but not the right
to park on it.
Internal Rate of Return [IRR]
The true annual rate of earnings on an investment. Equates the value of cash invested with cash returns. Considers the application of compound interest factors. Requires a trial-and-error method for solution.
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