TX RE Investment

Cheryl bought her home three years ago for $217,000. Assuming her home appreciated at the 3% rate typical of her current market, how much is her home worth now?

$237,121.76

What percentage of a neighborhood shopping center's gross leasable space does the major tenant lease?

30 to 50

How many dwelling units does a commercial residential property have?

5+

What's the average gross leasable square feet for a regional shopping center?

591,825

Who or what entity directs the activities of credit unions?

A board of directors

What can an on-site property manager negotiate with a prospective tenant to have included in the lease agreement to ensure that the tenant is running a profitable business?

A cancellation clause

Which of the following is the best definition of a contingency?

A condition that must be met before the sales contract is complete and enforceable.

Which of the following could be subject to a gift tax?

A gift of $17,000 to your son

There are three types of international buyers: those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home in the U.S., and those who are looking for ______.

A luxury home to purchase as an investment

Which of the following is an example of constructive eviction?

A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.

When taking an analytical look at the area surrounding a proposed development, the traffic patterns—and their effect on local business—and the commute time for potential residents in the area are important factors to consider. These can all be determined by conducting _______________.

A time-distance study

When modifying office buildings to meet accessibility requirements, owners should focus on these four areas: accessible approach and entrance, ______, access to restrooms, and any other necessary measures, such as access to public amenities.

Access to goods and services

One evening during their weekly card game, Cecilia and her group of retired friends are recounting the difficulty they had finding a place they could afford that was close to a hospital. Cecilia added that they were the lucky ones because she has a few other friends who have had to put their names on a waiting list to get into a low-maintenance condo development just down the street. What current market trend is this an example of?

Aging baby boomers

Gregor says, "I wanted to form a limited partnership with no general partners." What's wrong with this statement?

All limited partnerships must have at least one general partner.

Which of the following is an example of a reverse exchange?

An investor finds and closes on an investment property and then decides to immediately sell another investment property.

Which of the following investors is exempt from fair housing laws?

An investor who owns fewer than three single-family homes

What is dynamic risk?

An uninsurable business risk resulting from economic, tax, and market changes

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

Apartment building with 50 units

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

Automatically renew

Which of the following has always had a significant impact on housing demand?

Availability or lack of employment

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

Bearer

An investor purchases a single lot and constructs a building to the specifications of a prospective long-term tenant. What's this called?

Build to suit

Which of the following is one reason for the popularity of commercial leasing?

Business owners can often make more money on their business than they can on the appreciation of the building where they conduct that business.

What is the definition of "before-tax cash flow"?

Cash flow before taking income taxes into account.

In this type of corporation, stockholders, directors, and company officers are typically the same people.

Close

Private loan companies may charge higher interest, larger fees, and could require ______ to secure a loan.

Collateral

Jules just took over property management for a large apartment complex. What is one thing she should do immediately?

Collect all applicable electronic files.

For condominium properties, the owner's rights are detailed in which document?

Condominium bylaws

Chadwick is a developer considering purchasing a large piece of unimproved land for a subdivision development. What should he do before committing to the project?

Conduct a feasibility study.

Connor was the seller and Duke was the buyer when Connor sold his property. Who conveyed the title?

Connor, as grantor

A deed states, "For love and affection, the receipt and sufficiency of which is hereby acknowledged." What does this statement represent in the deed?

Consideration

Karsten had a great experience with his apartment and landlord until about two months ago, when the plumbing in the unit above started leaking into his apartment. The landlord keeps saying he'll fix it but hasn't, and now Karsten has mold growing on the ceiling and walls. Karsten is moving out before his lease has expired, which is a form of ______.

Constructive eviction

What agency administers the Interstate Land Sales Full Disclosure Act?

Consumer Financial Protection Bureau

Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole?

Contribution

Carlton, an owner of several retail spaces and one apartment building, is ready to sell his investments. He thinks the most lucrative approach would be to change his current properties into condominiums. What is this investment opportunity known as?

Conversion

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

Which of the following is defined as what it would take to recreate that property if it disappeared off the face of the earth today?

Cost

Shaunessy is a developer of low income housing. He's likely eligible for a tax _____.

Credit

Which statement best describes an amortized loan?

Debt that is paid off by making periodic payments consisting of interest and principal

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%

Ricky is once again reviewing the plans for expansion. He's always trying to find ways to keep the tenants happy by addressing their growth needs while ensuring that making upgrades to the facility doesn't significantly impact the owner's profits. Which office building property manager's duty is this?

Determining capital expenditures

Which of the following statements about state fair housing laws is true?

Each state is responsible for establishing and implementing its own fair-housing regulations.

Good real estate investors tend to make decisions based primarily on ______.

Education and analysis

Investors can determine the relative strength of the job market by evaluating the _____________.

Employment rate

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

Equity

Which special lease clause stipulates increased rental rates at specific times during the lease term, or requires tenants to pay a proportionate amount of the overall increased utility expense, in addition to their base rent?

Escalation

This is the part of Eileen's job that she enjoys the least: Telling tenants they have to leave because they've failed to comply with the terms of their lease. Which commercial property manager duty is Eileen having to perform?

Evicting tenants

Drew violated the terms of his lease by having pets, so property manager Sheila has started ______ proceedings to get him removed from the apartment.

Eviction

Which type of deed is considered a court-ordered deed?

Executor's deed

Fiona signed a lease with her landlord for a commercial building. A percentage of Fiona's sales will be paid to the landlord, in addition to her lease payment. Why would Fiona agree to this arrangement?

Fiona wants to reduce her base rent.

Deidra wants to invest in a super-regional shopping center. What size trade area can she plan to service?

Five to 25 miles

Why might a business owner opt to lease a building rather than purchase it?

Flexibility in moving

Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns a(n) ______.

Freehold estate

What phrase describes the amount that today's dollars grows to over time?

Future value

Bill gave his son, Chandler, $40,000. He was surprised to learn that it was subject to a tax. What type of tax is this?

Gift tax

Buyers are becoming increasingly aware of environmental issues, which is leading to a demand for sustainable and non-toxic housing materials. This trend is known as:

Greener buyers

When a real estate transaction is financed using a contract for deed, what advice should real estate agents give to their clients?

Have an attorney review the contract.

Ziggy has his eye on a residential single lot that's located next to a commercial area. There are rumors of imminent rezoning of the residential area to mixed use. Why is Ziggy excited about this prospect?

He knows the rezoning will increase the lot value.

Kevin is a property manager who's acting as an agent for Angela. Which of the following is true about Kevin?

He owes Angela the duties of care, loyalty, obedience, accounting, and disclosure.

The time frame between purchasing land and selling it is known as the __________________.

Holding period

Honey is the seller in an installment sale of a residential property. She is paying her capital gains tax through installment sale deferment, and her installment obligations at the end of the tax year will be less than $5 million. Given her situation, which of the following statements is true?

Honey will only pay taxes proportionate to the gain collected each year.

Which of these statements best describes value in use?

How much the property is worth to its owner as it's currently used

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.

When is an investor required to pay the alternative minimum tax?

If the tax calculated on IRS Form 6251 is higher than that calculated on the investor's regular tax return.

As supply decreases, price ______.

Increases

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

If your investor realized a gain of $140,000 on the sale of an investment property, and the depreciated amount was $20,000, what would happen?

Investor will pay 25% on the $20,000 and either 15% or 20% on the other $120,000.

Which of the following best describes the non-judicial foreclosure process?

It may be used if the deed of trust includes a power-of-sale clause.

Which of the following organizations is temporary in nature?

Joint venture

Carmine buys unimproved land and develops it in stages, selling it off as it's improved. Carmine is a _______.

Land banker

Which type of property appeals more to developers of commercial properties and subdivisions?

Large, flat properties near town

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

Which of the following is an essential element of a valid real estate contract?

Legal purpose

Which of the following is a passive type of real estate investment?

Limited partnership

Which of the following is a disadvantage of real estate investment based on the fact that it may be more difficult to sell quickly without a loss of capital?

Liquidity

Why is it important for tenants and owner/landlords to review the insurance section of a commercial lease?

Many times, the amount of insurance specified in the lease is higher than the amount a tenant actually carries, and higher than the amount the landlord actually requires.

Which of these is a dynamic risk?

Market change

What is another name for a super-regional mall?

Mega mall

Carla Ricardo has been offered her dream job in another state. She asks her current landlord to let her out of her lease early. The landlord agrees to do so, with no strings attached. Carla and her landlord have decided to terminate the contract through ______.

Mutual agreement

What does NCUA stand for?

National Credit Union Administration

Which of these is generally a commercial property manager's responsibility, but not a residential property manager's responsibility?

Negotiating leases

Property manager Martha can expect the property owner to _______.

Obtain and maintain proper insurance

When does partial performance of a contract occur?

One or both parties have completed only a portion of the terms agreed to in the contract.

Property taxes generate approximately ______ of local government revenue.

One third

Tom believes he is the victim of discrimination at the hands of his real estate agent. How long does he have to file a complaint?

One year

Which of the following is a true statement about joint ventures?

Participants in a joint venture may hold title as joint tenants or tenants in common.

Life insurance companies sometimes like to insure their investment in commercial projects by insisting on an equity position. This is known as ______ financing.

Participation

What type of income is received through activities not directly related to active participation in a business or earnings from wages, such as rental income?

Passive

For the vast majority of loans, a single late ______ does not automatically mean the loan has gone into default.

Payment

With which type of lease do tenants pay their base rent plus a percentage of their gross sales?

Percentage

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

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

Preserve capital

Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted?

Price

Mortgage bankers are mostly ______ enterprises.

Private

Marcia Weinstein dies, and her property is not held in a trust. Thus, her estate will go through ________ to ensure her property is distributed to her heirs in accordance with her will.

Probate

The owner's covenants and an insurance provision are included in which of the following documents?

Property management agreement

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.

When modifying office buildings to meet accessibility requirements, owners should focus on these four areas: ______, access to goods and services, access to restrooms, and any other necessary measures, such as access to public amenities.

Providing an accessible approach and entrance

The use of one investment to finance another is called _______.

Pyramiding

When an investment property is sold, three taxes that apply are transfer tax, capital gains, and ______.

Recaptured depreciation

The Tax Cuts and Jobs Act made changes to the AMT that effectively ______.

Reduced the number of people the tax affects

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.

Samuel is selling a 99-lot subdivision across state lines. His rival, Max, has a 123-lot subdivision that he's selling across state lines. What must Max do that Samuel doesn't have to do?

Register the project with the Consumer Financial Protection Bureau.

Kristoff got a bit behind on his mortgage and missed several payments. He and his lender devised a schedule that gives Kristoff an opportunity to make up those delinquent payments. What is this an example of?

Repayment plan

______ managers live in and manage apartment buildings.

Resident

Which of the following statements about the EPA's environmental impact study is true?

Results are often reviewed and approved by a community board.

Bridget has an investment portfolio that includes an equity REIT. Which of these is most likely to be part of the REIT's investment?

Retail shopping centers

What is an optional arrangement on a sale-leaseback arrangement?

Sale-leaseback buyback

The number of houses sold over a period of time is reflected in ______.

Sales volume

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

The market for real estate in Chad's area has experienced a sudden increase in demand, and there aren't enough homes to go around. It seems like a bidding war ensues for every available property. What's the condition of the real estate market in Chad's area?

Seller's market

The building owner just congratulated Cyrus on attracting tenants to the office building that have similar business interests. At which office building property manager's duty has Cyrus excelled?

Shopping for tenants and getting the right tenant mix

Which one of the following could be a clue that a property was formerly a waste disposal site?

Soft spots, mounds, and discolored soil

Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?

Statute of frauds

Lorenzo just received a prestigious fellowship to study abroad for a year! However, he still has six months left on his one-year apartment lease. His landlord has given him permission to draw up a new agreement with his sister Maggie, whereby Maggie will live in the apartment, pay rent to Lorenzo, and then Lorenzo will pay the landlord. This is an example of ______.

Subleasing

Which of the following trusts is created according to the terms of the will of a deceased person?

Testamentary

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

The buyer

Which of the following is a true statement regarding current trends in condominiums?

The condominium model is being used for commercial properties.

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.

Dom, the owner of a single-lot investment, has decided to lease his property. What happens if the tenant makes improvements to the property, and then decides not to renew the lease when it expires?

The improvements belong to Dom.

Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end?

The lease continues on a month-to-month basis.

The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels' depreciation basis calculations?

The loan origination and lender fees that they paid at closing

Under a sole proprietorship form of business, ______.

The owner assumes personal liability for all debts

What's market value?

The probable sales price if the property were listed today and a willing seller and buyer were involved in the transfer of ownership

In a 1031 exchange, there are rules governed by Section 1031 of the Internal Revenue Code. The rules include _______.

The property in an exchange must be like-kind.

Which term refers to the tenant's right to live in a rental property without harassment or trespass by the landlord?

The right of quiet enjoyment

In commercial lease agreements, tenants pay the owner in exchange for ______.

The right to operate their business on the property

When Edmund died, he left several properties to his heirs. He owned a grocery store and a campground outright, and a strip mall that was held in a living trust. Which of the properties, if any, did NOT have to go through the probate process after his death?

The strip mall

What advantage does the LLC form of business ownership offer?

They offer pass-through taxation similar to partnerships.

Why do investors/owners and office building property managers market their properties?

They want to attract prospective tenants and maintain their occupancy.

Why may a developer have to pay impact fees?

To address the burden on existing infrastructure caused by the development

Why might an investor purchase a single lot?

To develop it and sell it in its improved form

What's the purpose of an assessor's parcel number?

To identify a property for tax purposes

Which statement describes the purpose of the Interstate Land Sales Full Disclosure Act?

To protect consumers from fraudulent purchases.

Which formula is used to calculate an office building's non-productive space?

Total square footage x percentage of non-productive space = non-productive space

Which formula is used to calculate an office building's productive space?

Total square footage ‒ non-productive square footage = productive space

What is another name for debentures?

Unsecured bonds

What do investors need to determine before they can calculate their taxable income?

What their net operating income is

When does a seller's market occur?

When supply is low and demand is high

When would ancillary probate proceedings be required?

When the deceased owned property in another state.

Zander, a relatively inexperienced residential property manager, has decided to rent an apartment to his friend, Melissa, without a written lease. Melissa has a history of not paying her rent. Which of the following issues may Zander face because there is no signed lease agreement?

Zander may have difficulty evicting Melissa for breach of contract.

A property is generating $100,000 in income and has expenses of $25,000. The investor pays $3,000 toward mortgage principal each year and $32,000 toward interest, plus another $4,000 in income taxes. What is the before-tax cash flow?

$40,000

Which of the following is earned income, i.e., income earned directly through the taxpayers' efforts?

Active

The direct capitalization method would be a good choice of appraisal method in which of the following situations?

An apartment building that has consistent income and expenses year after year.

Which of the following must developers register with the Consumer Financial Protection Bureau?

Any subdivisions that have 100 or more nonexempt lots

The ______ method converts a single year's expected income (or an annual average) into a market value.

Direct capitalization

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty

Commercial banks fall into which of the following category of lenders?

Institutional lenders

Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?

Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.

What's simple interest?

Interest that's calculated based on the current principal of the loan amount multiplied by the interest rate

What type of value may consumers be interested in if they are looking for the potential rate of return?

Investment value

Marcy wants to collect economic data about businesses and local growth and decline. Where can she go to find this data?

Local chamber of commerce

When borrowers fail to pay property taxes, allow their property to go into disrepair, or ______, they could face loan default.

Miss scheduled mortgage payments

Which of the following scenarios is an example of corrective maintenance that may be overseen by a property manager?

Replacing a section of roof after a leak

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.

Bob signed a contract to purchase Ingrid's apartment building. Bob decided he didn't want to be a landlord, and Ingrid decided she didn't want to sell and move to Maui. They mutually agreed to cancel the contract and Ingrid returned Bob's earnest money. This is referred to as ______.

Rescission

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

Sole proprietorship

Forecasting the income and expenses that we can reasonably expect to bring in and pay out over a short term results in a budget that's every property manager's dream. That budget is ______.

Stabilized

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

Super-regional shopping center

Which of the following terms is used to describe more land than is needed for the planned development, but not enough land to carve out for another purpose?

Surplus land

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

Taiwan, the U.K., and Canada

The owner's covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property's legal owner. What's the third key piece of information?

The fact that the owner is not facing foreclosure

How important is the community's acceptance of a proposed development in an area?

t's important, because lack of acceptance can cause costly delays, or even stop a development from happening.