Investment CE

Which of the following is a characteristic of subprime loans prior to the Great Recession?

- approved for people with low incomes and poor credit histories -often included adjustable rate mortgages with low initial interest rates - loan defaults

Which factors contributed to the economic crisis that we experienced 07-09?

-easier credit increased the number of subprime mortgages -fannie mae's made an effort to increase homeownership rates - the belief that housing prices would continue to rise - the massive jump in foreclosures depressed the housing market

Henry dies, and his property is not held in a trust. Thus, his estate will go through probate to ensure his property is distributed to his heirs in accordance with his will. The probate process often takes ____ before the property is distributed to the heirs of the deceased

A year or more

In this section, the seller either accepts the offer or comes back with a counter-offer

Acceptance of offer by seller

Prices decrease. Is it a buyers market or a seller's market?

Buyer's market

Supply is greater than demand. Is it a buyers market or a seller's market?

Buyer's market

This section in a contract outlines the requirements for the seller to provide proofthat the property is habitable

Certificate of occupancy

According to the National Association of REALTORS, the majority of foreign investment in US real estate has so far come from

Chinese

In a contract, this section documents where the closing will place and what day

Closing Date and Place

This section of a contract identifies the circumstances and conditions under which the transaction might need to be terminated

Contingencies

This section of a contract identifies the amount of earnest money the buyer has put down to show good faith and interest in the property

Deposit to Listing broker

This trust may be altered or discontinued by any of the parties to the trust

Discretionary

Which of the following is a requirement for a trust to qualify as a real estate investment trust?

During the last half of any year, no more than 50% of shares were owned by five or fewer people

This section puts the parties on notice that verbal assurances will not be enforceable

Entire contract

Your client is a large developer who wants to build new retail space. She's considered zoning, construction codes, and development regulations. What other governmental influence will she also need to consider?

Environmental codes

When property values remain at the same level and are at their highest monetary value, the neighborhood is in what stage of the neighborhood life cycle?

Equilibrium

True or False. A GRIT (grantor retained income trust) must be established for at least a 10 year period

False

True or False. Both living and testamentary trusts avoid probate

False

True or False. For married couples filing seperately, the maximum amount of debt that can be treated as acquisition debt for tax purposes on a main home plus a second home is $1 million

False

True or False. Land trust must be created at the time the real estate is purchased, not after it's been acquired.

False

True or False. The role of the trustor and trustee can't be performed by the same person.

False

True or False. There are no costs associated with maintaining a trust.

False

True or False. With a land trust, the person who establishes the trust (the trustor) can't also be the beneficiary

False

According to the NAR information regarding foreign investments in the US real estate market from april 2017-march 2018: True or False. Foreign buyers purchased 153 billion in property in the US.

False (121 billion)

True or False. Although investors rely on licensees for contractual needs and services, they don't tend to depend on licensees for market trend information.

False.

True or False. Appraisers aren't a good source of information for investors because appraisers generally work for lenders.

False.

True or False. Investors don't rely on their personal obervations; they prefer data

False.

Daisy has a knack for maintaining positive relationships and wants an investment where she's in control. Is she a good fit for real estate investment?

Good fit.

In this section of a contract, sellers disclose whether they are behind on payments, and buyers indicate whether they intend to occupy the property

Home equity theft protection

You can't move land, and location plays a huge role in the value of real estate. This refers to the ____________ of the real estate market.

Immobility

The Stewarts have lived in their home along the Eastern Seaboard for 30 years and don't have any intention of selling. They're responsible homeowners, so every now and then they make sure to determine the ___ of their home in case it's destroyed and must be replaced.

Insured value

Once established, this trust can't be altered until the goals of the trust have been met

Irrevocable

What happens at the end of the term established for a granter retained income trust (GRIT)?

It vests to the beneficiary

this section of a contract specifies the deadline for the seller's response to the buyer's offer

Life of offer

A lender requests an appraisal of a property under foreclosure. What type of value is the lender most likely to be interested in?

Liquidation value

What kind of trust is created during a personʼs lifetime, and is established to convey property and avoids probate?

Living trust

in the early 2000 before the 2007 financial crisis, how would you characterize the real estate market?

Low interest rates and high property values

What are the two primary types of deductions a taxpayer may take on a primary residence?

Mortgage interest Property taxes

Ivor is looking for a safe investment that offers high yields. Is he a good fit for real estate investment?

Not a good fit

This section of a contract describes how notices to the parties may be delivered and deemed received

Notices

This section of a contract defines the items that the sellers want to leave behind and those they want to remove (exlude)

Other Items Included

The section of a contract identifies the seller and buyer who are entering into the contract

Parties to the Contract

In a contract, this section lets sellers know when they need to clear out so that the buyer can move in

Possession of property

This section of a contract defines the purchase price, whether there are any seller-paid closing costs and how the buyer intends to pay for the property

Price and Payment

In this section of a contract, the seller notifies the buyer whether disclosures are being provided or not

Property Condition Disclosure

This section of the contract provides a legal description of the property being offered for purchase

Property description

Ishmael is an investor client who tells you he wants to invest in a hotel for crews of whaling ships. It needs to be near the waterfront and definitely near a whaling port. He knows he'll be able to manage the hotel in a way that his target audience will appreciate. Which segments has he defined in his request?

Property type location investment strategy

this section of a contract identifies the broker ho is responsible for ringing about the purchase and sale of the property

Real estate broker clause

What does a mortgage real estate investment trust invest in?

Real estate debt

What is the investment vehicle type for a Mortgage REIT?

Real estate debt

What is the investment vehicle type for an Equity REIT?

Real estate property

The houses in one neighborhood are all of similar sizes and style. When the Smiths' house goes into foreclosure, what principle will affect the value of the next-door neighbors' house if they sell at the same time?

Regression

This section of a contract specifies that the seller is responsible for any risk of loss or damage to the property until the title transfers.

Risk of loss

Demand is greater than supply. Is it a buyers market or a seller's market?

Seller's market

Prices increase. Is it a buyers market or a seller's market?

Seller's market

in this section of a contract, the seller identifies the types and services utilities available on the property

Services

Tim's condo is identical to one in the same complex that's also for sale, so the purchase price will probably be very similar. What is this value principle?

Subsitution

When prices go down because there are too many homes on the market and to few buyers, this is an example of ____

Supply ad demand

What kind of trust is created according to terms of a deceased person's will and does not avoid probate?

Testamentary trust

In this section of a contract, the seller affirms that a good and marketable title will be conveyed to the buyer at closing

Title and related documents

According to the NAR information regarding foreign investments in the US real estate market from april 2017-march 2018: True or False. Chinese investors were the largest investors in US real estate

True

True or Debt that doesn't qualify as home acquisition debt may qualify as home eqity debt.

True

True or False. A land trust is formed specifically to hold real estate- real property is the only asset within the trust.

True

True or False. A living trust is created during a person's lifetime and is established to convey property

True

True or False. A testamentary trust is one created according to the terms of the will of a deceased person

True

True or False. A testamentary trust is one created according to the terms of the will of a deceased person.

True

True or False. Only the grantor/trustor of the GRIT trust may receive any income from the property while its in trust.

True

True or False. Spouses may transfer real and personal property into trust and then name themselves as joint trustees with rights of survivorship

True

True or False. Subsequent financing, such as a refinance, on a property that already has a home acquisition loan opened against it may also qualify as home acquisition debt.

True

True or False. Successful investors learn to recognize burgeoning trends and distinguish market cycles so they can plan ahead.

True

True or False. The debt used for acquisition financing (for tax purposes) must only be used for the purchase or improvement of the property; anything beyond these expenses isn't considered part of the acquisition financing for tax purposes.

True

True or False. When a person dies, estate assets outside of a trust must go through probate. Probate can take up to a year or more before the property is disbursed to the heirs.

True

True or False. When a person dies, estate assets outside of a trust must go through the probate. Probate can take up to a year or more before the property is disbursed to the heirs.

True

Janice and Steve's oceanfront house is worth significantly more than an identical house up the coast a few miles. Which characteristic of the real estate market do they have to thank for this?

Uniqueness

What are the six characteristics of real estate?

Uniqueness Immobility Permanence Longevity Influenced by government policy Slow to respond

Your real estate investor client, Annalise, has an investment plan that includes purchasing several acres of property downtown. When the deal falls through, you know Annalise, an experienced, smart investor, will make the right decision, which is to:

Walk away from the property and move onto another one.

FIRPTA (Foreign Investment in Real Property Tax Act)

When a non-resident sells real property owned in the US, the IRS wants to make sure it receives any capital gains taxes owed, so they require the buyer to withhold 15% of the gross purchase price of the property when disposing of the property.

Which of the following government influences can affect value by restricting use of a property, perhaps even preventing the highest and best use of a property?

Zoning

In this section of a contract, the seller verifies that the property is zoned for a specific use and complies with building codes and ordinances

Zoning/bldg Code compliance

This section of a contract identifies any items that are being made part of the contract agreement

addenda

Is Potential for high yields an advantage or disadvantage of realestate investing?

advantage

Fatima purchases an apartment building near the site of a new industrial park

anticipation

The seller can use this section of a contract to indicate whether or not an attorney needs to approve the agreement

attorney approval waiver

When it comes to real estate investments, "commercial' is _____

both an investment strategy and a property type

Resources for investors

cbre.com globest.com marcusmillichap.com loopnet.com costar.com nar.realtor irem.org

Investors who maintain strong relationships with local ________ will have a source of information about trends in commercial property values and net operating incomes.

commercial real estate lenders

The principles of value that tell you why a property value goes up or down.

competition anticipation conformity regression progression contribution highest and best use substitution Change: integration, equilibrium, disintegration, and rejuvenation

This section of a contract specifies that the buyer agress to recieve the property in its current state

condition of property

Is high capital requirements an advantage or disadvantage of realestate investing?

disadvantage

Now let's tlak about the value principle of change, and the cycle that's part of the principle. Which part of the cycle is in effect when a condominium complex has all its units occupied by owners whose HOA des pay to maintain the grounds in immaculate conditions?

equilibrium

Taxes, construction codes, and development regulations are all ways that ___________ can influence a real estate investment and potentially increase or decrease the investment's value.

federal and local government

The cliffs where Janice and Steve's oceanfront house is perched and eroded. Their home is suddenly a lot closer to the ocean, uncomfortably close. In fact, now their property is worht a whole lot less. What characteristic of the real estate market is affecting the value of their home?

immobility

Which of the following resources would you utilize to find property listings to use for comparable values and rental surveys

loopnet

Types of property value

market value investment value going-concern value insured value salvage value liquidation value assessed value value in use

This section of a contract makes it clear that the parties who sign are responsible for complying with the terms of the contract

responsibilities of persons

The chance that an investor might lose money is known as ______

risk

These sections of a contract verify that the buyer and seller agree to the terms of the contract and the dates on which the verification was made.

signatures of buyer/seller

Governmental policies important to consider when investors are looking at properties

taxes federal control of money zoning environmental controls construction codes development regulations

This section of a contract notifies both the buyer and the seller about how closing adjustments will be handled.

transfer tax, recording costs