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Identification Certificate
A Certificate issued by a Surveyor General certifying that the building complies with the municipal approved plans and with the conditions of title contained in the Title Deed

Immovable Property
Land, buildings and everything that is permanently attached to it.

Improvements
Buildings, parking areas, drainage works and so forth added to vacant land with the view to increasing its value.

Income Capitalisation Approach
Estimating value (V) by dividing Net Operating Income (NOI) by an overall capitalisation rate (Ro). Thus V = NOI / Ro. This method of determining the value of property is normally applied when valuing commercial property with long term commercial leases and the benefit lies in that the valuation of the revenue the property can produce is used and not just the valuation of the property only. The capitalisation rate is determined by risk factors such the current interest rate and the duration of the existing leases.

The Income Capitalisation method can be more fully understood by downloading our Commercial Property Financial Model here:
Commercial Property Financial Model: The DeskTop Tab reflects the methodology

Related Topic: Approaches to Value, Assessed Value, Assessment, Capitalisation Rate, Net Operating Income (NOI), Yield (Initial).

Income Property
A property which is acquired for the purposes of producing income for the owner, usually from rental.

Index
Describes the method of standardizing the base for comparative data in a time series, usually equating the initial measure to 100 and then expressing all other data in exact relation to that base, e.g. the index for office rentals in any year by comparison with a base-year value of 100 might stand at 90 or 110, indicating a fall or rise of 10% respectively.

Industrial Park
An industrial park is a multi-tenanted complex of industrial buildings, typically surrounded by a security fence with access control and possibly some greenery.

Industrial Property
Land zoned specifically for industrial use, for example, factories.

Industrial-Building Grades

Prime
A property in which space is easily lettable because it satisfies each of the following prerequisites:

a. Generally in a good condition;
b. Satisfactory macro access (i.e. access to freeway);
c. Satisfactory micro access (i.e. from street to building);
d. Proper loading facilities;
e. Eaves >4 m (excluding micro/ mini units);
f. Clear spans;
g. On ground level;
h. Adequate three-phase electrical power.

The eight conditions above are prerequisites for space to be considered prime. However, a building may possess additional enhancements that could improve lettability through increasing the size of the potential tenant pool. Such enhancements could include sufficient office accommodation, adequate parking, sprinkler systems, masonry up to sill height, adequate floor loadings, roof insulation, sufficient yard space and a good location (as opposed to access).

Secondary
This is industrial space which is not classifiable as prime because it does not satisfy all eight prerequisites for prime space listed above. Such space is typically old buildings or structures, which have been haphazardly renovated. It would have poor access, too little yard space or office accommodation, inadequate goods lifts, no three-phase power and obsolete electrics and ablution facilities. Such space is often (but not exclusively) found in highly urbanised areas.

Inflation
The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Over time, as the cost of goods and services increase, the value of a rand decreases, since one rand will buy much less in future than it previously could.

Infrastructure
Essential services and facilities, such as streets, bridges, transport routes, utility generation and delivery, etc.

Initial Yield
The first year’s expected net operating income (based on existing leases and other income reasonably expected) divided by the purchase price. Therefore the initial yield and the capitalization rate are only the same in those rare cases where a building is let at open-market rentals.

Initiation Fee
A once-off payment levied on new home loans to cover administrative costs of providing a new home loan.

Insolvent
A person unable to repay debts and whose estate is declared insolvent in terms of the Insolvency Act 24 of 1936.
Related Topic: Liquidation.

Inspection Fees
Also known as valuation fees or assessment fees. The fees charged by the bank for assessing a property prior to granting the finance applied for.

Instalment
The monthly amount payable on outstanding debt. In terms of a home loan, it is also known as bond repayments. It includes the interest on the home loan, a small portion of capital (loan amount) repayment and other costs such as insurance and fees. These monthly repayments are usually payable by debit order and can increase or decrease as the interest rates increase or decrease.

Instalment Sale
A property sale in which the purchaser pays the purchase price or a protion thereof to the seller in instalments, usually monthly.

Institutional Investors
Organisations which pool large sums of money to invest in companies. Institutional investors include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds

Insurance
Protection of assets against unforeseen loss or damage. A monthly fee (premium) is payable to an insurance company for a guarantee that the insurer will pay out a certain amount of money for unforeseen loss or damage to the insured property, as defined in the insurance policy.
Related Topic: Acquisition Costs.

Inter Vivos Trust
A trust which is set up and operates during the life of the founder, as opposed to a trust that is created upon the death of a person.
Related Topic: Beneficiary, Deed of Trust, Investment Trust, Trust, Trustee.

Interest
The amount charged by a lender for the lending money to a borrower, calculated as a percentage of the remaining balance of the amount borrowed.

Interest Bearing Account
An account in which attorneys and/or estate agents hold money for clients until the money has to be paid out to third parties, for example, a deposit paid by a purchaser which will be paid to the seller. The interest on the money in the account accrues to the person who paid the money into the account, unless otherwise stipulated in a contract.
Related Topic: Trust Account.

Interest Rate
The annual rate charged to a borrower on a loan by a lender, expressed as a percentage. The interest is calculated on the daily balance of the loan and capitalised monthly.
Related Topic: Capped Rate, Interest Rate Cap.

Interest Rate Cap
The maximum interest rate increase an adjustable mortgage loan may be subjected to. An interest rate cap could refer to a specific value or a specific range. For example, a loan with a 12% interest rate and a 5% interest rate cap, would have maximum interest rate of 17%. Or, simply stated, the interest rate cap could be stated as 17%. Interest rate caps are used as a risk hedging tool, in times where large fluctuations in interest rates may occur.
Related Topic: Capped Rate, Interest Rate.

Internal Rate of Return (IRR)
A performance measurement that takes cognisance of the time-value of money. Technically, it is that rate which equates the inflows with the outflows of a cash flow. Also known as the money-weighted rate of return because the timing and weights of the money-flows influence the return.
Related Topic: Geometric Mean Return.

Intrinsic Value
The value of an item itself, rather than the value that may be attributed as a result of the buyer or seller’s perception. It thus excludes by definition any enhancements or defects that may influence its ‘market value’. For example, the intrinsic value of a painting is the value of the canvas and paint, rather than the value to an art collector

Inventory
A detailed list of assets such as fixed property in possession of a person or a business.

Investment
The purchase or exchange of any asset or right to an asset by an investor with the aim of making a profit. For example, an investor ‘purchases’ a fixed deposit at a bank with the intent of earning interest thereon and so making a profit.

Investment Property
Any property purchased with the aim of producing economic gain for the buyer, either from income generated, such as rental, or from the appreciation in value, realised through refinancing or resale.

Investment Trust
An entity that pools the resources of its shareholders and invests the proceeds in stocks, real estate, or other investments with the aim of increasing the equity of the shareholders.
Related Topic: Beneficiary, Deed of Trust, Inter Vivos Trust, Trust, Trustee.

Ironclad Contract
A colloquial term referring to a well-structured contract which makes provision for all eventualities.

 
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