Azure Tide Section 17 2021

Markus purchased a property with a total rental income of $23,000. He paid a property management company $3,200 to handle the rental clients. He paid $5,000 total for insurance and taxes. He also paid $2,000 in miscellaneous repairs and expenses. He also paid $7,100 in principle and interest payments. What was his year-end cash flow?

$5,700

Samantha purchased a property 5 years ago for $525,000. At the time, it cost her $9,500 in closing costs. She also invested $70,000 in capital improvements in the property. She recently sold it for $730,000. It cost her $55,000 to sell it. What is her Adjusted Basis for the property?

$604,500

Mathew sold a property for $280,000 and paid $12,000 in selling expenses. His adjusted basis for the property is $275,000. What is the amount of his capital gain or loss?

$7,000 Loss

What are the similarities between a Business Brokerage and a Real Estate Brokerage?

Both deal with Real Property Both require a Real Estate License Both involve long-term liabilities > All of the Above

There are four risk types associated with general business conditions including all of the following except which one?

Capital risk

Business brokerages require the same expertise as in regular real estate sales.

False

Illiquidity is the ability to convert noncash investments into cash quickly.

False

Loans for investments generally are charged the same interest rates as for non-investors.

False

Investment in multi-family housing, such as a duplex, a multiplex, and even large apartment buildings, is an investment in commercial real estate.

False, Investment in residential real estate includes single-family and multifamily housing.

Interest-rate risk is when expenses go up faster than rents can be increased, for example, the investor can actually see decline in the value of their investment funds.

False, Purchasing-power risk is when expenses go up faster than rents can be increased, for example, the investor can actually see a decline in the value of their investment funds. Interest-rate risk is when the rate that is being charged by a lender outpaces the rents that are being charged to tenants.

Lynden Rice recently became interested in investment real estate property. He has been researching about the topic, but asks you, a fellow real estate agent, what you know about the type of property that would bring him the highest rate of return. What information would you likely tell him?

Investing in industrial properties overall outperforms most other property type investments on an income basis coming in only second to investing in apartment buildings. Either option would produce the best likely outcome.

All of the following statements describe appreciation except which one?

Large changes in appreciation has a small impact on long-term value.

Which of the following statements is false when describing tax shelters?

Legal tax shelters generally do not create income

All of the following would be considered to be disadvantages of investing in real estate except for which one?

Liquidity

An advantage of Real Estate Investments includes all except which one?

Liquidity

Which of the following is not a type of real estate investment opportunity?

Securities

Which one of the following statements is FALSE regarding cash flow?

The formula to calculate cash flow is the same formula that is used to calculate net operating income.

An investor is said to be leveraging their investments in which of the following instances?

They borrow all or part of the funds to make the investment

Equity buildup is when an investor enjoys a gain in equity when he pays down the debt on the property and when the property increases in value due appreciation. This is an advantage of real estate.

True

Even small changes in appreciation can have a large impact on long-term value.

True

Liquation analysis is a process unique to business valuations verses regular real estate.

True

The Rate of Return is the amount of income generated in a year by capital invested, expressed as a percentage of the total sum invested.

True

The fact that the buyers of real estate tend to pull from the local geographic area around a property makes investing in real estate to be viewed as a disadvantage.

True