SAE Investment Study 2

What is the capital gains exclusion amount? $125,000 for single taxpayers, $250,000 for married couples filing jointly $250,000 for single taxpayers, $500,000 for married couples filing jointly $25,000 for single taxpayers, $50,000 for married couples filing jointly $50,000 for single taxpayers, $100,000 for married couples filing jointly

$250,000 for single taxpayers, $500,000 for married couples filing jointly

The IRS will only allow _______ of passive losses to be deducted against active taxable income. $2,000 $3,000 $4,000 $5,000

$3,000

The IRS requires foreign property owners to withhold _____ of the gross purchase price when they sell real property they own in the U.S. 12.5% 15% 22% 5%

15%

Direct capitalization converts what into a market value? A single year's expected income Projected income and expenses for the next five years. Projected income for the next five years. Sales price

A single year's expected income

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 Carpeted halls and stairways Climate control Reduced noise levels

Access to goods and services

Which of the following is earned income (i.e., income earned directly through the taxpayers' efforts)? Active Passive Portfolio Stock

Active

Which of the following must developers register with the Consumer Financial Protection Bureau? Any subdivisions that have 100 or more nonexempt lots Any subdivisions that have 20 or more nonexempt lots Any subdivisions that have 40 or more nonexempt lots Any subdivisions that have 80 or more nonexempt lots

Any subdivisions that have 20 or more nonexempt lots

Why are credit unions able to compete with large commercial banks? As non-profits, they have fewer regulations, which translates to greater lending flexibility. They know how to get around regulations and red tape. They're smaller, so they don't get into hot water with regulators as often. They've grown so significantly that they're virtually the same size as most commercial banks.

As non-profits, they have fewer regulations, which translates to greater lending flexibility.

An LOA of 10% means that assessments are _________. At 10% of value At 10 times value At a 10-mill rate At full assessment

At 10% of value

______ is a legal action that liquidates or restructures debt. It can have a long-lasting negative impact on the borrower's ability to obtain financing. Bankruptcy Foreclosure Judgement lien Tax sale

Bankruptcy

Which of the following statements is true regarding community property rights and property ownership? All property purchased before the marriage and owned individually must be sold. The profits are divided equally between the partners. All property purchased before the marriage automatically comes under the community property rights requirement. Any property purchased before the marriage must have the spouse as the beneficiary should the owning partner die. Both partners may own other properties purchased before the marriage separately (in severalty), but any properties purchased during their marriage are owned equally.

Both partners may own other properties purchased before the marriage separately (in severalty), but any properties purchased during their marriage are owned equally.

With a promotional land sale agreement, who's at risk if the underlying mortgage falls into default and foreclosure? Buyer Investor Lender Seller

Buyer

Sam's kids talked him into putting up the basketball hoop that their grandparents got them for Christmas. On a quiet Saturday afternoon, Sam is busy nailing the backboard to the front of their garage facing the street when one of the officers of the homeowners association walks by. "I'm so sorry," she says, "but you'll have to take that down. Basketball hoops in direct view of the street are prohibited." What is in place in Sam's subdivision that would prohibit this? CC&Rs Deed warranty Law Regulation

CC&Rs

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? cause Company B's operating leverage is low, it can be more profitable in any kind of economy. Company B can make a marked impact on profit by increasing sales. Company B can reduce its variable costs by increasing sales. Company B doesn't have to increase sales as much as Company A to cover its fixed costs.

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

Which economic principle says that value is created and maintained when the characteristics of a property fit in with its surroundings? Anticipation Conformity Contribution Substitution

Conformity

When a landlord allows the tenant to use the premises of a given unit, the landlord is satisfying which element of a valid lease contract? Acceptance Consideration Legal capacity Mutual assent

Consideration

What agency administers the Interstate Land Sales Full Disclosure Act? Consumer Financial Protection Bureau Department of Energy Conservation Developers Land Sales Administration Housing and Urban Development

Consumer Financial Protection Bureau

As part of his lease agreement with his landlord, Alex mows the grass around his apartment building each week in return for a small reduction in rent. What is this an example of? Condition Covenant Enjoyment Promissory

Covenant

Which of the following analyzes net operating income (NOI) for a single year, and is used when the property's income isn't expected to vary much over time? Annuity capitalization Direct capitalization Discounted cash flow analysis Yield capitalization

Direct capitalization

In which area of the U.S. will you find the greatest number of mutual savings banks? East North South West

East

Good real estate investors tend to make decisions based primarily on ______. Advice of a lawyer Education and analysis Gut instinct Recommendations by a real estate professional

Education and analysis

Which type of deed is considered a court-ordered deed? Bargain and sale deed Executor's deed Full covenant and warranty deed Quitclaim deed

Executor's deed

Which of the following contributed to the 2007 financial crisis? Falling home prices Falling interest rates More home sales Rising home prices

Falling home prices

The risk that is directly related to leverage is called ______ risk. Business Capital Financial Leverage

Financial

Robbie's lender notified him of an impending foreclosure, and told Robbie that his property will be sold at public auction. After the auction occurred, he receives a notice of eviction for which the lender had to petition a court. What does this describe? Actual eviction Foreclosure by advertisement Foreclosure by entry and possession Foreclosure by writ or entry

Foreclosure by advertisement

Discolored soil, soft spots, or mounds on the land could be indicators of a(n) ______. Former waste disposal site Historical district Natural hazard Underground storage tank

Former waste disposal site

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. Full service Graduated Net Percentage

Graduated

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 already owns several commercial investment properties in the higher zoned area. He knows the higher zoned area contains a better class of people. He knows the rezoning will increase the lot value. He likes the idea of having a residential income property near a commercially zoned area.

He knows the rezoning will increase the lot value.

Arnold plans to open a brokerage. What might make him select a sole proprietorship legal structure? He wants control over branding. He wants to enter the market with a recognized brand. He wants to minimize his personal liability. He wants to share liability.

He wants control over branding.

Marshall is your investor client who is interested in purchasing an apartment building. You've identified several properties to show him. Since he's planning to remodel and add more units to the property he ultimately purchases, which of the following is something you should mention? Even though the properties are similar, the property taxes for those closest to the city will be higher. He will only be able to deduct the first $10,000 of property taxes on his investment property. Improvements increase assessed value and will increase property taxes. Property taxes aren't deductible for business purposes.

Improvements increase assessed value and will increase property taxes.

Which of the following is the cost of replacing a building in the case of total loss? Insured value Investment value Mortgage value Value in use

Insured value

What type of value may consumers be interested in if they are looking for the potential rate of return? Assessed value Insured value Investment value Value in use

Investment value

Which of the following statements about converting neighborhood shopping centers to commercial condominiums is true? It's more profitable for the owner to sell the entire shopping center as a single purchase before converting. It's more profitable for the owner to sell the individual buildings in the center before converting. Tenants are not given the option to purchase the buildings they currently rent. The neighborhood shopping center doesn't lend itself to being converted easily into condominiums.

It's more profitable for the owner to sell the individual buildings in the center before converting.

What is the formal action to impose the property tax? Ad valorem basis Appropriation Levy Ordinance

Levy

If a tenant moves out before a lease term expires and the landlord is able to rent the unit, the tenant is ______. Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit Required to forfeit the security deposit and all personal property Still liable for the rent for the term of the lease Subject to heavy fines and potential jail time if caught

Liable for rent for the month during which the move-out occurred and any month until the end of the lease that the landlord is unable to rent the unit

Which organization manages a community's budget, zoning, and building code review, among other things? Association of building inspectors City hall Department of Labor Local planning board

Local planning board

What is the name of the tenant group that, along with the property manager, is responsible for regional shopping center promotional activities? Association of tenants Mall events planning board Merchants' association Tenant planning board

Merchants' association

Which types of stores are usually the magnet stores for a community shopping center? Local shoe store and a national department store National bank chain and a locally prominent department store National bookstore chain and a locally prominent supermarket National department store and a locally prominent supermarket

National department store and a locally prominent supermarket

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? Evict tenants who fail to comply with the terms and conditions of the lease agreement. Negotiate leases. Oversee the maintenance of buildings on the property. Qualify potential tenants.

Negotiate leases.

Which element of a valid contract is established by getting the signatures of all parties? Competent parties Consideration Lawful objective Offer and acceptance

Offer and acceptance

Which of the following best describes foreclosure by writ of entry? Notification of pending auction, public auction, notice of eviction Petition for immediate repossession and eviction Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed Petition to enter, repossession, notice of eviction

Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed

Egbert owns property in which he lives in one unit and rents out the other four units to tenants. What type of investment does Egbert have? Apartment complex Condominium Plex Single-family home

Plex

Like other agency agreements, the property management agreement details the terms of "employment" between the _______ (agent) and the _______ (client). Landlord; tenant Owner; property manager Owner; tenant Property manager; owner

Property manager; owner

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. Acceptance Control Ownership Quiet enjoyment

Quiet enjoyment

Which type of commercial property offers parking surrounding the outside of the property, but also indoor parking beneath the building? Community shopping center Neighborhood shopping center Regional shopping center Strip store

Regional shopping center

The number of houses sold over a period of time is reflected in what? Inventory rates New building permits Price levels Sales volume

Sales volume

Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That's probably because Blane's store is in which type of location? Factory outlet mall Neighborhood center Regional shopping center Strip mall

Strip mall

Marlin wants to invest big. He's interested in a commercial property that's at least 1.2 million square feet, has tons of parking, and at least two big name anchor tenants. What type of retail space is Marlin considering? Factory outlet Neighborhood center Strip mall Super-regional mall

Super-regional mall

Which type of store is usually the major tenant for a neighborhood shopping center? Bank with ATM Furniture store Shoe store Supermarket

Supermarket

You're working out a deal with a possible commercial tenant. The tenant has asked you to build out eight cubicles in the space to fit her needs. What type of maintenance will you be performing? Corrective Custodial Preventive Tenant improvements

Tenant improvements

As responsibility for the property is transferred, the manager should pay special attention to ______. A startup cash fund Other sources of income besides rental The accounts payable ledger The mortgage payments

The accounts payable ledge

What is the formula NOI ÷ V = R used to calculate? The capitalization rate The rate of future growth The recapture rate The terminal value

The capitalization rate

Which of the following statements is true about constructive eviction? The court may award damages to the tenants. The court may order the vacated tenants to pay monetary damages to the landlord. The landlord can shut off the power to the unit, thereby forcing the tenant out. The tenants who abandoned the property may never legally re-enter the premises.

The court may award damages to the tenants

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 cost of the electrical system upgrades they did after purchase The cost of the title insurance for the property The loan origination and lender fees that they paid at closing The price that they paid for the property, minus any land costs

The loan origination and lender fees that they paid at closing

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 campground The grocery store The strip mall They all had to go through probate.

The strip mall

Which of the following is a true statement about the relationship between capitalization rate and value? Capitalization rate and value are the same thing. There is an inverse relationship between the two. When capitalization rate goes down, so does value. When capitalization rate goes up, so does value.

There is an inverse relationship between the two.

What's the purpose of an assessor's parcel number? To identify a property for tax purposes To identify the assessor assigned to a particular property To identify the number of parcels an assessor has revalued To provide a numeric rating related to a parcel's size

To identify a property for tax purposes

Property manager Alexandra wants to ensure she gets everything she needs from the property owner when she begins to manage the property. What's the best way to do this? Ask the office manager. Just do her best. She's not going anywhere so if she misses something she can get is as needed. Let the owner decide what he thinks she should have. Use a takeover checklist.

Use a takeover checklist.

Julian is glad that the property owner at the townhouse community he manages established a substantial capital reserve budget for unexpected expenses, like the new roofs needed after a hail storm. What are these types of expenses called? Fixed Operating Stable Variable

Variable

Jolene, a bank employee, is asked to manage rental properties that the bank owns. At the very least, she should be given _______. A management contract Permission to sell the properties as advised Power of attorney Written authorization to sign leases

Written authorization to sign leases