Real Estate Investment 2

Joey wants to invest in a regional shopping center. What size trade area can he plan to service?

5 to 15 miles

In addition to the one major tenant, how many tenants does a neighborhood shopping center normally have?

5 to 20

Which of the following acts requires office buildings to be accessible to disabled individuals, such as those who use wheelchairs?

Americans with disabilities act

Which of the following options describes principal as it relates to loans?

Amount of payment that will be applied to the loan balance

Raquel had big plans for the land she just purchased on the outskirts of a quaint town: She was going to build a fashionable resort. She was shocked when her request for a permit was denied due to the town's no-growth policy. What did Raquel fail to do before she invested?

Check out the regulatory environment

Property with ownership by more than one person is known as ______.

Co-ownership

Which of the following statements about trends in condominium ownership is true?

Condominiums are frequently used as timeshares.

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

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

To make sure the rental income he collects accounts for inflation and cost increases, Andy asks each of his strip store tenants to sign a ___________ lease, in which the tenant's payments increase incrementally from one period to the next.

Graduated

Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?

Gross lease

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.

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

Holding period

Which of these statements best describes value in use?

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

Jane is selling her home to Micah. What must occur for Jane to effect a transfer of title to Micah?

Jane must deliver the deed to Micah.

Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who's 16. Which of these must occur to make this transfer legal?

Meg must sign the deed and have her signature acknowledged.

What is another name for a super-regional mall?

Mega mall

When Saundra Neill signed a property management agreement with Awesome Altus Properties, Inc., she made sure the agreement stated explicitly that Awesome Altus owned each property she would be managing. In which section of the agreement would she find this verification?

Owner's covenants

Your client asks you which properties are multi-family residential. The most complete answer you can give is ______.

Plexes and apartment buildings

Which formula is used to calculate the gross rental income for an office building?

Productive square feet x rental rate per square foot = gross rental rate

A neighborhood that has been disintegrating for some time is undergoing a rejuvenation, with several properties on one block being heavily renovated or entirely rebuilt. As a result, even the properties that are still old and shabby increase somewhat in value. This is the principle of ________.

Progression

If a landlord removes the tenant's right of ______, the tenant can claim constructive eviction and vacate the property with no further financial responsibility to the landlord.

Quiet enjoyment

Which of the following statements regarding investment is true?

Real estate investment provides the potential for earning income two different ways from the same investment.

Investors often choose real estate because profit is typically earned through _______.

Rental income and resale value

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

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 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

With this alternative to foreclosure, borrowers receive permission from their lender to sell the property for less than the amount owed on the borrower's mortgage.

Short sale

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

Soft spots, mounds, and discolored soil

If a landlord wants to notify a tenant that the leased property is subject to a mortgage, what clause would be included in the lease?

Subordination clause

Offerings for promotional land sales must include ________.

Tax liabilities, basis for guarantees, information on public transportation, terrain details, proposed and existing improvements, and any issues with terrain

Why is it important for buyers of a residential property to understand how taxes relate to the whole ownership lifecycle?

They may be able to take advantage of tax deductions.

Which of the following statements is true regarding developers who plan to allow FHA financing in their subdivisions?

They must follow the FHA's minimum building standards.

Buyers Hamish and Megan want to meet with an individual private lender. Why might they need an individual private lender's assistance?

They're unable to find complete financing elsewhere

Which ADA title prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities?

Title I

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.

Jarod is the property manager of a community shopping center. How many anchor tenants does the center have?

Two

Discounted cash flow analysis and annuity capitalization are forms of ______.

Yield capitalization

Discounted cash flow analysis is a form of what?

Yield capitalization

Your client hates the fact that out of her $1,027 monthly payment, more than $900 is going toward interest. What do you tell her?

"That's amortization for you."

Yanni is an investor who has just purchased a $300,000 building. Similar buildings are returning a rate of 7%. What can Yanni anticipate his annual net operating income to be?

$21,000

Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?

$387,000

What's the average length of a community shopping center lease for a major tenant?

15 to 20 years

Jarod is the property manager of a community shopping center. How many anchor tenants does the center have?

2

Who or what entity directs the activities of credit unions?

A board of directors

What's a legal agreement or promise made between two parties?

A covenant

What's an income shelter?

A deductible allowance from net income

Hester has been doing her research and attending city planning meetings in hopes of finding a single-family home on the edge of a commercial district. What type of investment opportunity is Hester looking for?

A home targeted for rezoning

Which of the following properties has the best chance for good appreciation in the relatively short term?

A piece of land near a highway

Direct capitalization converts what into a market value?

A single year's expected income

Moses invested in subdivided land and then sold it without improving it. This makes Moses ______.

A speculator

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

Which of the following is an advantage to investing in a single-family home rental?

Ability to depreciate an appreciating asset

Which phase of the investment cycle is best known for write-offs and, depending on the project, tax credits?

Acquisition

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

Alternatives to foreclosure include deed in lieu of foreclosure, short sale, or ______.

Bankruptcy

Investor Bob owns a commercial property. He receives $100,000 in income from the property but is only taxed on $75,000. What might explain this?

Bob may have an income shelter.

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

Close

Tax credits for low-income housing are available to _______.

Developers and investors

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

Future value

In the months before the financial crisis beginning in 2007, what made collateralized debt obligations (CDOs) such an attractive investment?

Increasing home prices gave them the perception of a safe, high-yield investment.

Land doesn't cease to exist, and it's not depreciated or covered by property insurance because of its _________.

Indestructibility

Which of the following is the cost of replacing a building in the case of total loss?

Insured value

Applying a capitalization rate to the net operating income is one way to determine a property's ______ value.

Investment

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.

Which one of the following responsibilities requires the licensee to secure a profitable deal for the landlord that is also affordable for the commercial tenant?

Negotiate leases

Gary leases a commercial building and pays all expenses related to the building, including taxes and insurance. Gary has a _______.

Net lease

When can specific performance be enforced under a sales contract?

One party didn't meet the terms of the contract in the specified time frame, and is now being required to do exactly what was agreed to in the contract.

Shawn is a property manager preparing a budget for an apartment complex owner. It includes income and expenses for the property's ongoing needs. What type of budget is he preparing?

Operating budget

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

Percentage

Peter wants to set up a land trust so that his children can benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust, and Tom agreed. How is the trust created?

Peter conveys the real estate to Tom.

What does a mortgage real estate investment trust invest in?

Real estate debt

Which document is used to create a corporation?

State of incorporation

When two very similar properties are for sale in the same neighborhood, which one will sell first according to the principle of substitution?

The lower priced home

Return on investment is another name for what?

The profit made from an investment

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

Quentin is a victim of fair housing discrimination who is seeking redress in federal court. What is the limit on the amount of punitive damages he may be awarded?

There is no limit

Which one of the following characteristics makes property taxes a reliable target for taxation?

They have a high compliance rate.

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

What their net operating income is

When does a stagnant real estate market occur?

When both supply and demand are low

When would ancillary probate proceedings be required?

When the deceased owned property in another state.

Your client, Joseph, has a commercial income-producing property. How long does he depreciate this property?

39 years

A developer is likely to get the best return for investment if the project is completed during the _________ phase of the real estate market cycle.

Expansion

Samuel wants to do a 1031 exchange. He sold his investment property and has identified the property he'd like to buy next. Within how many days must he close on this property in order for it to qualify as part of the exchange?

180

How do you calculate maximum equity?

Divide cash flow by desired rate of return

The increase a property's value beyond what the investor originally invested as a down payment is called _______.

Equity build up

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

Large, flat properties near town

Because real estate offers __________, investors can sometimes make a 100% return on their investment

Leveraging opportunities

Which type of partnership is common for real estate ventures?

Limited partnership

What information is listed on the promissory note?

Loan amount and schedule of repayment

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

If developers have questions about building a subdivision in a community, which organization should they approach for answers?

Local planning board

Which organization is responsible for reviewing site plans for new developments?

Local planning board

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

The law of agency requires Westin, a property manager, to ______.

Maintain confidentiality and loyalty to the owner's best interests

Which of the following features is shared by the mortgage and the deed of trust?

The borrower is required to maintain the property and pay property taxes and insurance.

Bonnie has a mortgage on her investment property, but she allows the homeowners insurance to lapse. Which of these is a possible consequence of this action?

The lender can place Bonnie's loan in default.