Real Estate U ch. 16 Q&A part 2

93. If a property owner has a $105,000 tax loss, and falls within a 33% tax bracket, what savings will the owner experience...?

0.33*105000 = 34650

57. What is the value of a commercial property that yields an NOI of $115,000 at a 7.5% cap rate...?

115,000 / 0.075 = 15,33,333

11. If the going cap rate for a multi-family building in a particular market is 8.5%, what will the purchase price be if the NOI on the property is $125,000...?

1470588 divide 125000 / 0.085

51. City Brokers recently signed a lease on 22,000 sq.ft. of office space at $18.00 per sq.ft.. What is the annual rent paid by City Brokers...

18*22000 = 396000

29. What is the available cash that a property yields if the income is equal to $550,000, the cash expenses equal $220,000, and the principal and interest amount to $75,000...?

255000

Kevin is a real estate investor looking to buy a multi-family building. If other investors in the market are willing to accept a 7.5% return on their money, how much should Kevin pay for a property that yields an NOI of $220,000...?

2933333= 220000/0.075

If an investor invests $720,000 in cash to purchase a property that yields $225,000 in available cash, what is the cash-on-cash return for the investor...?

31.25 (Percent %) 225000/720000

Abby purchased a $3,250,000 shopping center at a 7.25% cap rate. What is the NOI on the building...?

3250000 X 0.0725 = 235,625

If the rent on a 3,500 sq.ft. retail space is $68 per sq.ft., how much does the tenant pay on a monthly basis...?

3500 X 68 /12months = 19833

65. If the rent for a 15,550 sq.ft. office space is $25 per sq.ft., what is the annual rent for the space...?

388750

75. What is a common management fee to assume for a large multi-family building...?

5 %

Louis purchased a $6,200,000 office building at a 5.5% cap rate. What is the NOI on the building...?

6200000 X 0.055 = 341000

35. What do lenders typically have a buyer place in an escrow account...?

Capital Reserves

33. Replacement reserves, as commonly found in pro-forma statements, typically account for what...?

Capital expenditures

37. Usable area is also known as what...?

Carpetable area

Capitalization rates do NOT take what into consideration...?

Debt Service

91. XYZ Company recently signed a lease on their new office space. As part of the lease agreement, they must pay for property's real estate taxes and premiums for insuring the building. What type of lease did XYZ Company sign...?

Double net lease

49. In this agreement, the tenant agrees to subordinate their lease to a mortgage on the building...?

SNDA

63. The price/sq.ft. described in a commercial lease is typically represented on what basis...?

annual

The annual return an investor would achieve on a property that was purchased using all cash is equal to what...?

capitalization rate

17. Free rent offered by the landlord to a tenant typically begins on this date...?

commencement Date

99. As interest rates go down, cap rates do what...?

decrease

95. When do commercial property owners typically experience a tax loss on their investment...?

in the first few years after buying the property

27. Which of the following is an example of a 'Deduction for Taxes'...?

interest paid on a mortgage

25. Lower interest rates will yield what...?

lower cap rates

A HIGHER CAP RATE WILL YIELD WHAT...?

lower price

Which of the following properties would be considered the least risky as an investment...?

o 100 unit multi-family building

31. How much cash will an investor have to pay on a property where the bank is providing a loan at 75% LTV, on a purchase price of $4,750,000 with $350,000 in closing costs...?

o 1537500

89. When is a pro-forma conducted by a real estate investor...?

o AWhen evaluating a potential property to buy

what incentive may a landlord provide to attract new, quality tenants....?

o Amenities o Free rent o Built-out of tenant's space

What is the most common index used to determine rent increases in a lease escalation clause...?

o Consumer Price Index

Which of the following is a lease clause found in most commercial leases

o Lease duration clause o Free rent clause o Tenant's future work clause

21. Why may investors be willing to pay more for a property when interest rates are low...?

o Low interest rates yield higher cash flows

85. What will a commercial building owner consider a capital expenditure, as opposed to a 'repairs and maintenance' expense...?

o Renovating the lobby

83. Which of the following is considered a 'repairs and maintenance' expense...?

o Replacing broken windows

79. Who is typically responsible for paying utilities in a newly constructed, large multi-family building...?

o Tenants

87. What is an underlying component that contributes to an investor's decision as to what capitalization rate is appropriate for a particular property...?

o The amount of risk associated with the deal

71. Why might the rentable square footage be greater than the usable square footage...?

o The rentable square footage includes common areas o The rentable square footage includes wall thicknesses o The rentable square footage includes circulation

97. In this type of lease, the tenant is required to report the performance of the business to the landlord...?

percentage lease

John is looking to buy a multi-family building. As part of his due diligence, he estimates what the income and expenses of the building will be during the first 5 years of ownership. What document will show these numbers...?

pro-forma

41. Property A is an office building with a going cap rate of 6.5%. Property B is a multi-family building with a going cap rate of 4.7%. If both properties produce the same NOI, which property is worth more...?

property B

39. The tenant name and apartment number of each unit in a multi-family building can be found in this document...?

rent roll

77. The monthly rent that each tenant pays in a multi-family building can be found in this document...?

rent roll

Which of the following is the largest in area...?

rentable square footage

23. A percentage lease is commonly used by these tenants...?

retail tenant

City Brokers recently signed a lease on their new office space. As part of the lease agreement, City Brokers must pay for all of the building's expenses. What type of lease did City Brokers sign...?

triple net lease

The capitalization rate is equal to the annual return an investor will achieve if the property were purchased how...?

using all cash

19. When will investors demand paying a lower price for a property...?

when interest rates are high