Texas Real Estate Investment

Which of the following meets the definition of a triplex?

A dwelling with three separate living units

What do you get when you add the purchase price to closing expenses and the cost of any improvements during the time of ownership, then subtract any depreciation taken?

Adjusted basis

For which of these properties would gross income multiplier be calculated?

Apartment building with 50 units

Which of the following is a current trend in condominium investments?

Applying the condo format to other types of properties

Catherine has decided to purchase additional parcels to add to the existing farm ground she's planning to sell. Catherine knows combining the parcels into one larger plat will increase the value of the land. What's this called?

Assemblage

With a periodic estate lease, a landlord must remind a tenant that their lease will ______.

Automatically renew

What is the primary difference between regional and super-regional malls?

Both size and number of offerings

Which document details the duties of the condominium board and the scope of its power?

Bylaws

If TVC has $450,000 in assets, $75,000 in debt, and $330,000 in equity, which of these ratios are correct?

Debt-to-Asset, 17%; Debt-to-Equity, 23%, Debt-to-Capital, 19%

Widget Corporation's fixed production costs are 78% of its overall production costs, and thus has high operating leverage. As Widget's nearest competitor, Franklin's fixed production costs are 39% of it's overall production costs. Relative to operating leverage, which one of these statements is true?

If Franklin and Widget both increase production by the same rate, Widget will experience a higher profit.

Which option best describes what an environmental impact statement is?

It describes and analyzes a proposed action that may have a significant effect on the environment.

What does income shelter mean?

It means that the income received is sheltered from taxation.

In a trust, the trustee is the person who ______.

Makes sure the terms of the trust are carried out

Which type of commercial property is designed to expand either up or down?

Super-regional shopping center

Which type of store is usually the major tenant for a neighborhood shopping center?

Supermarket

Which of the following statements describes an off-site residential property manager?

Supervises on-site personnel for multiple properties

Property manager Cal has received three middle-of-the-night voice messages on his phone from the same tenant, Lin, who is furious with Cal's standard late rent fee. The late rent policy is spelled out in Lin's written lease. What should Cal do?

Talk to Lin as soon as possible, listen to his complaint, and help him understand that the fine is non-negotiable.

Sam and Monique knew that the old industrial site that they purchased needed some environmental cleanup, but they don't have the cash and put cleanup on hold. The EPA hired its own crew to deal with groundwater issues because of industrial solvents and billed Sam and Monique $164,000 when the job was complete. If Sam and Monique don't pay the bill, which of the following could happen?

The EPA can seek damages in court for up to three times the actual cleanup costs.

Which of the following statements is true about tax credits for investors who build affordable housing?

The tax credit the investor receives is a dollar-for-dollar reduction in taxes owed.

Which statement correctly identifies a federal fair housing law and what it addresses?

Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.

Why are property developers required to pay special attention to issues regarding density, infrastructure, and traffic patterns?

To ensure consistency with a city's general plan

The introduction of a development into an area can impact ____________, which, in turn, can have an effect on local businesses.

Traffic patterns

Conventional loans may be conforming or nonconforming, depending on whether they meet ______ guidelines.

Fannie mae and freddie mac

Which of the following is the best example of investment leverage?

Financing most of an investment and putting very little cash in

Which of these would be considered a submarket within the investment strategy segment?

Fix and flip

What's the name of the tax program that requires a withholding of a portion of the gross purchase price when foreign owners of real estate in the U.S. sell that property?

Foreign Investment in Real Estate Property Tax Act (FIRPTA)

Which type of deed is sometimes called a general warranty deed and contains all six covenants?

Full covenant and warranty deed

The use provision in a lease describes which of the following?

How the tenant will use the property, including allowable activities

Which alternative to foreclosure is being utilized when a lender creates a schedule for the borrower to catch up on delinquent mortgage payments?

Repayment plan

In order for an active investor to qualify for a $25,000 deduction, the investor has to have an adjusted gross income of ____________________.

$100,000 or less

Vacancy rates in existing brick-and-mortar stores are around ______.

14%

Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?

2048

Steven put down $10,000 toward a property's purchase price, financed the rest, and now has a cash flow of $2,800 after repairs and debt service. What's his ROI?

28%

A property valued at $500,000 is returning a net annual income of $45,000. What is the cap rate for this investment?

9%

Alec is considering investing in an older, but charming single-family home, then renovating the home by adding multiple kitchens and bathrooms. What type of investment opportunity is Alec contemplating?

A conversion

Damien was representing a commercial property owner. Which one of the following duties can the owner expect Damien to perform on the property owner's behalf?

Locate and qualify potential tenants.

What penalties may a person who is found guilty of falsely filing a fair housing complaint receive?

A sentence of up to five years' imprisonment or a $10,000 fine

Angus is willing to pay the owner a bonus to get a particular location in the neighborhood shopping center for his business. What location does Angus want for his store?

A spot in the center

Which of the following is a true statement about tax credits and tax deductions?

A tax credit is preferable.

What is a gift tax?

A tax on property received by one person when nothing of value was given in return

In order to promote tenant retention, Misty always tries to be ______.

A visible presence

Cap rate is ______.

A way of quickly valuing income-producing properties in comparison to other properties

Which of the following may represent an exemption from federal fair housing laws?

An owner-occupied rental property

Another name for a coupon bond, which is rarely issued anymore, is the _____bond.

Bearer

Theodore is planning to purchase one of two companies he's been researching. Both produce the same type of tools. Company A has a high operating leverage. Company B has a low operating leverage. Theodore is favoring Company A because of it's operating leverage. What advantage does Company B have that Theodore might not have recognized?

Company B doesn't have to increase sales as much as Company A to cover its fixed costs.

Anya, an owner of an older rental property, is ready to cash out. How would she realize the most profit?

Convert the rental property to condominium ownership

What do cooperative owners receive to demonstrate ownership?

Corporation shares and a proprietary lease

Your tenant, Tom, has called to complain about a broken water heater. You hire someone to replace it. What type of maintenance are you performing?

Corrective

Gabi's been researching commercial property in her area and has decided to invest in a retail space that, although located outside the main shopping area, will offer shoppers a wide variety of name brand goods at discount prices. What type of retail space is Gabi contemplating?

Factory outlet

Price levels are an indicator of _______.

Demand

Darrell lives in a very rural area where price levels have remained low for several years. What does this indicate about demand for housing in the area?

Demand is low

A group of investors bought property and developed a movie production studio. After a few years in business, the state passed regulations limiting the amount of tax incentives it would offer film studios shooting movies in the state. This move caused several companies to move their shooting to other states, jeopardizing the investors' ability to earn the return they were expecting. What type of risk is this?

Dynamic

Which REIT type specializes in owning certain building types, such as apartments or office buildings?

Equity

Which of the following statements is a true statement about points paid by a borrower for refinancing?

If a portion of the amount refinanced is used to improve the home, points could be deductible

Which of the following describes community property rights?

In some states, it's a form of property ownership for married couples with equal ownership and possession of any property acquired during the marriage.

What's the definition of "potential gross income"?

Income that a property could bring if fully leased

Capitalization is the process of converting ______.

Income to value

In addition to analyzing local economic data and evaluating community acceptance, the community and neighborhood market analysis should take into consideration the ________________ and whether it's sufficient enough to support the proposed development.

Infrastructure

When considering a development in a particular area, the investor should consider nearby amenities—from restaurants and recreational facilities to churches and schools—as well as access to public transportation, parking, and utilities. As a group, these factors are all considered an area's __________.

Infrastructure

Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf?

Represent her client's interest in all negotiations and transactions regarding the lease of the property.

Wrap-around loans are a form of _________ financing.

Junior

What's a residential property manager's greatest challenge?

Keeping rental rates optimum while keeping expenses as low as possible to maximize profit for the owner

Which type of property lends itself more to farming and agriculture?

Large, flat acreage properties in rural communities

Another benefit of a long-term tenant for the landowner is the ______ is considered an asset and can be used as collateral for additional financing.

Lease

Hosea invested in a large tract of rural property, and it looks as if he's going to have a long holding period ahead of him. What might Hosea opt to do?

Lease the land to a tenant farmer on a profit-sharing basis

In this type of partnership, non-general partners are limited in their authority.

Limited partnership

Real estate is NOT considered a _______ investment because it may be more difficult to sell quickly without a loss of capital.

Liquid

Martin placed all of his real estate investments in a trust, and the proceeds are distributed through the trust to his son Nathan. Martin still manages the properties indirectly, and Nathan currently benefits, as he's past the required beneficiary age of 18. What type of trust is this?

Living trust

Which organization manages a community's budget, zoning, and building code review, among other things?

Local planning board

Which two numbers do you add to calculate maximum price?

Maximum equity and maximum loan

Which individual matches borrowers with the lender and loan option that best meets their needs?

Mortgage broker

How can liens, such as those created by non-payment of federal income tax, result in mortgage default?

New liens can threaten the lender's position as primary lienholder. Default can occur for this reason.

Lendright Home Loans asked a trustee to begin foreclosure proceedings as permitted by the power-of-sale clause in the security instrument. This action does not need to involve the courts. What type of foreclosure process is being used?

Non-judicial foreclosure

Which document includes the size of units, construction, floor plans, amenities, recreation facilities, make and model of appliances, windows, how the landscaping of the property will be maintained, and the actual land on which a condominium building is situated?

Offering plan

Which type of real estate property can be divided into classes A, B, and C?

Office buildings

When does substantial performance of a contract occur?

One party has met most but not all of the terms specified in the contract, and may be required to pay damages for the terms not met.

Which type of legal structure may be either general or limited in type?

Partnership

Which of these property owners is eligible to take advantage of a 1031 tax-deferred exchange?

Reggie sells an apartment complex and purchases a new complex a month later in a different part of the city.

Land doesn't just cease to exist, a characteristic called ______. This is one reason that long-term, complex financing arrangements can be used.

Permanence

Real estate investor Dianne utilizes several strategies for staying on top of market trends, but one of her favorites is visiting an area and seeing what's happening. What strategy does this activity demonstrate?

Personal observation

Which of the following statements about topography in land investments is true?

Physical features of the land factor into development costs.

If a borrower fails to keep homeowners insurance on the collateral property, which of the following are actions the lender can take?

Place lender-acquired insurance on the property and bill the borrower

For both homeowners and real estate investors, buying real estate is considered a good way to ______.

Preserve capital

It's time to change the air filters in a 10-unit apartment complex. What type of maintenance will you be performing?

Preventive

Mortgage bankers are mostly ______ enterprises.

Private

Your client, Gabriel, has invested in a rental property. He looks at his property's operating statement, tweaks the numbers based on his knowledge of the market, and re-works the statement. Gabriel has created a/an________________.

Pro-forma statement

Which of the following is a true statement regarding property taxes and investments?

Property taxes for investment properties are fully deductible as a business expense.

Residential, commercial, and industrial are submarkets within which real estate market segment?

Property type

What does REIT stand for?

Real Estate Investment Trust

What type of asset is held in a land trust?

Real estate

What type of deed are you likely to receive if you purchase a property with cash at a foreclosure auction?

Referee's deed

Which paragraph in a sales contract puts the parties on notice that they are individually and jointly responsible for fulfilling the terms of the contract?

Responsibility and Non-assignability

In a lease agreement, what consideration does the landlord give to the tenant?

Right to occupy the property

Second-home condo investments that are purchased with a money-back guarantee and lock-in management agreement are generally considered by the SEC to be _______.

Securities

Which of the following is the simplest form of business structure where the owner is personally responsible for all business debts?

Sole proprietorship

Under which of the following real estate submarkets would an investment in public storage facilities fall?

Special use

Who is the withholding agent under Foreign Investment in Real Property Tax Act?

The buyer

Which of the following statements is true about constructive eviction?

The court may award damages to the tenants.

In response to the increase in foreclosures and losses on their balance sheets, not to mention a reduced market for subprime loans, many lenders slowed their lending activities. What was the impact of this on the overall economy?

The economy headed into a recession.

Which of these would void a deed intended to convey property?

The grantor is not mentally competent.