Why should investors be concerned about market rents if they are purchasing a property subject to leases?

Q: Why is a home a good inflation hedge

A: Inflation is a stage or condition in which the price is rising and the value of money is decreasing.…

Q: What are the major advantages of leasing a fixed asset rather than purchasing it?

A: A lease can be defined as an arrangement between the lessor(owner of the asset) and the lessee (user…

Q: What is a purchase option? How does it affect accounting for a lease?

A: Purchase option : A purchase option is an agreement that gives the lessee a choice to purchase the…

Q: How does the existence of leasehold improvements can affect the determination of the lease term?

A: Leasehold Improvements are referred to as any of the changes or improvements made to the rental…

Q: How does Leasing offer protection against the risk of declining asset values?

A: Leasing:    The term leasing defines that it is a process of renting a property to someone the…

Q: Why is the cost of financing with a sale-leaseback essentially the same as the return from…

A: Introduction: Financing costs are nothing but the interest and other costs that the company incurred…

Q: Determine the indifference price for a property that had an assumable below-market-rate loan?

A: Indifference price is the price at which the investor is indifferent to investing in any of the two…

Q: What are the advantages of lease?

A: A lease is a contract under the terms under which one party agrees to rent property owned by another…

Q: What is the significance of the passive activity loss limitation (PAL) rules for real estate…

A: Significance of the passive activity loss limitation (PAL) rule for real estate investors: The…

Q: What factors might cause the highest and best use of real estate to change during the course of a…

A: The question is based on the concept of property lease, lease is a contractual arrangement  to use…

Q: What situations cause us to remeasure a lease liability and right-of-use asset How is that…

A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…

Q: What do we mean by overage in a retail lease agreement? How might it be calculated?

A: Overage on retail lease contract and its computation as follows: Retail lease contracts show a least…

Q: What is the difference between a tax-oriented lease and a nontax-oriented lease?

A: A tax-oriented lease: A tax-oriented lease, occasionally named a true lease, which offer the lessor…

Q: What are the unique risks of land development projects from the developer’s and lender’s points of…

A: The risks of land development projects from developer’s point of view: Planning risk: The ability…

Q: What causes cap rates to rise and fall? In this section, we introduce certain changes in market…

A: The capitalization rate is the rate at which the investments on real estate assets return annually.…

Q: Why is the reporting of leases required? Justify your response.

A: A lease is an agreement where an asset is taken on rent and Lessor receives Lease rental in return.…

Q: How can the marginal rate of return be used to decide when to sell a property?

A: Answer: The following are the factors that cause a change in marginal rate of return over time, An…

Q: Differentiate between an operating lease, acapital (or financial) lease, and a sale andleaseback…

A: Answer: The term operating lease would be significantly shorter than the rented asset’s life. And in…

Q: Why might refinancing be considered an alternative to a sale-leaseback?

A: Introduction: The given question is related to the concept of real estate finance and investments.…

Q: What are the economic benefits of leasing vs ownership of assets?

A: MEANING:- Leasing of Assets - The leasing of assets refers when the owner gives the right to use…

Q: What is meant by “loss to lease”? Explain?

A: Loss to lease: It is the term used in Real Estate in leasing of property mainly apartment complexes,…

Q: How may the use of leases shift the risk of rising expenses from the lessor to the lessee?

A: A lease may be defined as a contract outlining the terms under which one party agrees to rent…

Q: What are the disadvantages of lease?

A: Lease:   Lease is a contractual agreement whereby the right to use an asset for a particular…

Q: How do you think expense stops and CPI adjustments in leases affect the riskiness of the lease from…

A: INTRODUCTIONLease is a contract in which the right to use the asset is given by the lessor to the…

Q: What are the general desirability among users to lease rather than own the space they need in their…

A: Leasing is a method through which person can hire fixed asset or place for certain period of time by…

Q: What are the major advantages to a lessor for becoming involved in a leasing arrangement?

A: The Effect of Residual Values, Guaranteed and Unguaranteed is as follows: In setting the lease…

Q: How does the analysis of a sale-leaseback differ from the analysis of owning versus leasing?

A: A sale lease back is very beneficial for the company because it helps the company to sell the asset…

Q: Why would an investor apply the Fama-MacBeth Method in asset pricing assumptions?

A: The Fama–MacBeth method in asset pricing is used to estimate different parameters for asset pricing…

Q: What would cause the rate of return for an investor that purchases real estate and leases it to the…

A: Corporate Tax is a fee for a company (cash outflow) paid by the government that is the principal…

Q: Which are the Factors Affecting Own-versus-Lease Decisions?

A: Owning an asset involves purchase of the asset using own or borrowed sources of funds, whereas…

Q: Why does a finance lease is economically similar to a purchase of the asset?

A: There are many similarities between purchase of a asset and Finance lease, such as: In a finance…

Q: What factors would tend to affect the value of a lease?

A: Lease is a contract between two parties in which one party lends its property or asset to the other…

Q: What discount rate should be used to evaluate a lease? Why?

A: Lease may be defined as the legal contract between two party's lessor and lessee, were one party…

Q: What factors would tend to make leasing more desirable than owning?

A: Lease: Leases are agreements in which the proprietor of the asset permits another party to utilize…

Q: Should the lease-and-flood arrangement be accepted? How should this proposal be presented to the…

A: Since, the cash flows are unconventional, a company needs to determine the Modified internal Rate of…

Q: Which best defines Market Value? Group of answer choices: Whatever the market will bear. Most…

A: Market Value is the value of the asset in the market place. In other words, it is the value at which…

Q: What are the benefits of recording a lease as short-term? To a large corporation?

A: Lease: A contractual agreement for an asset between two parties. The parties involved are lessee and…

Q: Which of the following is not a characteristics of an investment property?     a. land and/or…

A: Investment Property are accounted as per the guidance provided under IAS 40, Investment Property.

Q: Why do person choose to buy on lease?

A: Lease: Lease refers to a contract that outlines the terms under which one agrees to rent his or her…

Q: Under what conditions might a property with an assumable loan sell for more than comparable…

A: Property along with the assumable loan is expected to be sold for more than the comparable property…