Unit 7 Investing in Land Exam

What is the requirement for lots sold or leased that have to be registered with HUD?

25 or more

The land promoter has to furnish the buyer with a property report at LEAST

48 hours prior to signing the contract.

What affects the land investor's potential profits?

All of these (Timing strategies; Physical quality; Community attitudes)

Which of the following is TRUE about growth management?

All of these (ever-increasing prices for developments. serious shortages of land for housing. potential difficulties)

What is a speculator?

An investor that holds the land for growth in value

Why should investors be aware of the legal and political attitudes of local governing bodies?

Because it could have a direct effect on the future development of the land

Of all the forms of real estate ventures, what is the riskiest?

Investment in vacant land

With land, what determines the potential future growth in value?

Location

With land promotions, what clause is inserted into the original financing agreement to protect the purchaser from a promoter that defaults during the term of the agreement?

Recognition clause

How many calendar days is the "cooling off" period?

Seven

What is the goal of MOST land buyers?

To command the highest possible return on an investment

Which of the following is NOT a reason why investors lease to tenant-farmers during the holding period?

To keep the soil fertile for future resale

What is the penalty if a developer intentionally violates the law, makes an untrue statement, or omits any material fact?

Up to five years imprisonment, up to a $5,000 fine, or both

Which of the following statements regarding leases is FALSE?

When the lease expires, the landowner must offer the tenant an option to purchase the land prior to re-leasing.

An investor that improves raw acreage before selling is

a developer.

Land promoters MUST distribute to all prospective purchasers

a disclosure report describing the subject property.

Holding the land for appreciation requires

an educated prediction of the direction the city will expand.

Opportunity costs

are often ignored and need to be taken into account when estimating the profitability of purchasing land.

When a vacant property owner constructs a building on a lot to satisfy the particular requirements of a potential tenant, it is called

building to suit.

If a prospective buyer has NOT been given a property report prior to signing, the

contract is cancelled and the money is refunded.

Rezoning residential land to a more intensive use

could double or triple the value.

Raw acreage provides the investor with an opportunity to

do all of these. (diversify holdings. offset the risks of loss from other investments.earn high profits.)

During the holding period, MOST land

does not produce an income.

A vacant building owner pays

higher taxes than a vacant parcel of land owner because they have to pay taxes based on the value of the building and the land.

If not leasing, a vacant land owner must make cash expenditures for all of the following EXCEPT

holding taxes.

With speculative lots, investors buy strategically located vacant lots

in anticipation of a rise in value and profitable resale.

A comprehensive approach

is advisable because existing zoning of the land may not be its highest or best future use.

An investor needs to evaluate his personal financial positions before selling because

leasing may be more beneficial.

Investors should seek

lots located on section and township lines

Land is

not depreciable

The increase in value due to the acquirement of a group of adjacent properties into one property by the same owner is called

plottage.

Regulation Z

requires a disclosure of the total costs involved in most credit activities.

A land promoter can offset a cash shortage by factoring, a process that entails

selling the individual contracts secured through early sales.

A single property with a permitted use NOT in conformity with the surrounding properties is called

spot zoning