CE Shop Investment Exam
The IRS will only allow _______ of passive losses to be deducted against active taxable income.
$3,000
Rufus is once again before a judge for violating fair housing laws. The judge has found Rufus guilty and is imposing the maximum monetary penalty she can for a two-time offender who has committed the second offense within five years of the first, which is __________.
$37,500
Mildred is the seller in an installment sale of a commercial property. If her installment obligations at the end of the tax year are _______, she has the option to pay the capital gains tax in full at sales time or through installment sale deferment.
$5 million or less
What is the average gross leasable square feet for a super-regional shopping center?
1.2 million
Grady plans to develop a community shopping center. What size lot will he need?
10- to 40-acre
Ezra has filed a fair housing discrimination complaint against an investor. HUD is investigating. Within how many days of receiving the complaint does HUD have to respond?
100
Vacancy rates in existing brick-and-mortar stores are around ______.
14%
The IRS requires foreign property owners to withhold _____ of the gross purchase price when they sell real property they own in the U.S.
15%
What percentage of a neighborhood shopping center's gross leasable space does the major tenant lease?
30 to 50
Harper plans to develop a regional shopping center. What size lot will she need?
40 to 100 acres
Santiago plans to develop a super-regional shopping center. What size lot will he need?
60 to 120 acres
What can an owner or property manager negotiate with a prospective tenant to have included in the lease agreement in exchange for a prime spot in the center of the neighborhood shopping center?
A bonus
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 statements about commercial residential properties is true?
A commercial residential property is a multi-family residential property.
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
Alec is considering investing in an older, but charming single-family home, then renovating the home by adding multiple kitchens and bathrooms. What type of investment opportunity is Alec contemplating?
A conversion
What's a legal agreement or promise made between two parties?
A covenant
What's an income shelter?
A deductible allowance from net income
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns ______.
A freehold estate
On his desk, Bob has client files, phone messages, and invoices from creditors. How would you classify a phone bill?
A general record
A subchapter S corporation is taxed as ______, whereas a C corporation is taxed at both the corporate and shareholder levels.
A partnership
What penalties may a person who is found guilty of falsely filing a fair housing complaint receive?
A sentence of up to five years' imprisonment or a $10,000 fine
Which of the following is a potential ramification to the seller if a short sale is completed?
A short sale can negatively impact the seller's credit, and the lender may seek a deficiency judgment for the amount not repaid.
Moses invested in subdivided land and then sold it without improving it. This makes Moses ______.
A speculator
Angus is willing to pay the owner a bonus to get a particular location in the neighborhood shopping center for his business. What location does Angus want for his store?
A spot in the center
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.
Which type of alternative financing is also known as an all-inclusive loan?
A wrap-around loan
What type of financing can be used for a purchase, or a significant remodel or improvement, including building on vacant land?
Acquisition
Which phase of the investment cycle is best known for write-offs and, depending on the project, tax credits?
Acquisition
Eric's residential tenant hasn't paid rent for more than three months, so Eric went to court to start eviction proceedings. He's now been granted the right to remove the tenant. This is a(n) ______ eviction.
Actual
Which type of property tax is based on the value of the property?
Ad valorem
Which one of the following could apply to closing costs for an investment property?
Amortized over the life of the loan
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.
For which of these properties would gross income multiplier be calculated?
An apartment building with 50 units
Which of the following statements best describes the three-property rule as it relates to tax-deferred exchanges?
An investor can identify up to three replacement properties and not encounter a restriction as to fair market value as long as debt load requirement is met.
What's a land banker?
An investor who holds land in inventory
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
To arrive at annual debt service cost, divide ______ by the debt coverage ratio.
Annual NOI
Lyn runs a brokerage and maintains a master file for all the office transactions. The file must be maintained for how long?
As long as Lyn's state requires
Catherine has decided to purchase additional parcels to add to the existing farm ground she's planning to sell. Catherine knows combining the parcels into one larger plat will increase the value of the land. What's this called?
Assemblage
Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
Barbie owns two-thirds, and Midge owns one-third.
Another name for a coupon bond, which is rarely issued anymore, is the _____bond.
Bearer
Which of the following statements about condominium financing is true?
Because lenders view condos as a slightly higher risk, they usually require a slightly higher down payment.
Which of the following scenarios describes an example of unilateral rescission?
Bobby, the buyer, makes an offer on a house that doesn't meet the appraisal contingency. He cancels the sale.
Who's the mortgagor in a mortgage?
Borrower
When it comes to real estate investments, "commercial" is ______.
Both an investment strategy and a property type
What type of partnership requires one or more general partners?
Both general and limited partnerships
What can tax losses be used to offset?
Both passive and active income
Dynamic and static risk are considered ________ risks.
Business
Marcie bought a duplex, lived in one half, and rented out the other half. This is an example of what type of investing?
Buy and hold
With a promotional land sale agreement, who's at risk if the underlying mortgage falls into default and foreclosure?
Buyer
The supply of properties available in the market is greater than the number of buyers. What type of market does this describe?
Buyer's market
Which type of corporation involves double taxation?
C corporation
Tenants in the building that Harrison manages receive internet service with their rent. Harrison wants to upgrade to fiber optic, but the ______ don't contain enough money to make the upgrade this year.
Capital reserves
Jason is planning to invest in a new commercial development. He'd like to invest $400,000 and secure another $100,000 through financing. After shopping around, Jason could not find financing at an affordable rate. Of what type of risk is Jason the victim?
Capital risk
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
Property with ownership by more than one person is known as ______.
Co-ownership
After being required to put a minimum of 25% down on a loan, Duane invested in a multi-unit apartment building. What type of property does Duane own?
Commercial residential
HUD completed an investigation, after which it received assurances that the situation would be remedied, and that steps were being taken to ensure the discriminatory acts won't happen again. What's this an example of?
Conciliation
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
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?
Consideration
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
Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today?
Cost
Craig's loan is secured by a mortgage. Who holds legal title when this security instrument is used?
Craig
Which of the following is a form of commercial bank revenue related to mortgage financing?
Demand deposits
Which of the following accounts for the cost of inflation and the time value of money?
Discounting
How do you calculate maximum equity?
Divide cash flow by desired rate of return
Economic, tax, and market changes are types of _______ risk.
Dynamic
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.
In which area of the U.S. will you find the greatest number of mutual savings banks?
East
If you have a REIT that receives most of its revenue from property rental, what type of REIT do you have?
Equity
Which type of real estate investment trust is designed to deal exclusively in equities?
Equity REIT
The increase a property's value beyond what the investor originally invested as a down payment is called _______.
Equity buildup
Which of the following led to the 2007 financial crisis and negatively impacted investors that purchased properties in the early 2000s?
Falling home prices
The risk that is directly related to leverage is called ______ risk.
Financial
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.
How many dwelling units does a commercial residential property have?
Five or more
In addition to the one major tenant, how many tenants does a neighborhood shopping center normally have?
Five to 20
Deidra wants to invest in a super-regional shopping center. What size trade area can she plan to service?
Five to 25 miles
Sara, a local tenant, just signed a lease with a property manager from a community shopping center. Assuming she has an average length lease, how long is the term?
Five years
After spending three years gutting and renovating her 1925 American Foursquare into a local showplace, Evette buys another rundown property on her street as an investment. Given her experience, which of the following strategies is her most likely choice?
Fix and flip
Cooperative shareholders under a condop structure have ______.
Flexibility in selling and subletting, similar to that of condominium owners
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?
Foreclosure by advertisement
Burlingame Property Management just started managing Juliann's apartment complex. Who should be Juliann's main contact?
Francine, the person most responsible for the property
Stu is buying Freddie's property. What must occur for the transfer of title to take place?
Freddie must intend to convey the property to Stu.
Which type of tenant typically makes up half of a regional shopping center's tenant mix?
General merchandise stores
Taxes, construction codes, and development regulations are all ways that ______ can influence a real estate investment and potentially increase or decrease the investment's value.
Government
Two essential elements of a deed are the _________.
Grantor's signature and conveyance clause
Charlie, who owns and leases out a commercial building, pays taxes, maintenance, and insurance on the building. What type of lease agreement does Charlie have with his tenants?
Gross
What should property owner Solange do before handing over the reins to the new property manager, Gordon?
Hand over all financial information.
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.
Which of these statements best describes value in use?
How much the property is worth to its owner as it's currently used
Which type of real estate investment trust derives its income from the rent or sale of property and interest dividends?
Hybrid REIT
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.
Which of the following statements is a true statement about points paid by a borrower for refinancing?
If a portion of the amount refinanced is used to improve the home, points could be deductible
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.
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
Under which type of ownership arrangement can buyers purchase condominiums?
In severalty, in joint tenancy, in tenants in common, or tenants by the entirety
In the capitalization formula, what does the I stand for?
Income (I ÷ V = R)
Why do investors have a special interest in the impact income taxes have?
Income tax is a significant factor in return on investment.
Capitalization is the process of converting ______.
Income to 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.
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.
If an 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.
What tax advantage does a limited liability company have?
It combines pass-through taxation of partnerships with the limited liability of corporations.
Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she'll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?
It's a commercial enterprise that's open to the public.
When something is evaluated according to ______, this is called finding the value on an ad valorem basis.
Its value
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.
Wrap-around loans are a form of ______ financing.
Junior
Which one of the following entities meets the definition of a business structure that has no general partners and whose owners have limited personal liability?
LLP
Which one of the following statements is true about land trusts?
Land trusts generally continue for a specified term, such as 10, 20, or 30 years.
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
What is the formal action to impose the property tax?
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
In this type of partnership, non-general partners are limited in their authority.
Limited liability partnership
Which of the following is a passive type of real estate investment?
Limited partnership
A lender requests an appraisal of a property under foreclosure. What type of value is the lender most likely to be interested in?
Liquidation value
What information is listed on the promissory note?
Loan amount and schedule of repayment
What's the formula used to calculate monthly simple interest on a loan?
Loan balance x interest rate ÷ number of payments annually
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.
Dean's new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a _______ lease for the office space.
Loft
Which type of commercial property offers general merchandise and fashion, and is typically enclosed with inward-facing stores connected by a common walkway?
Mall
Which of the following statements describes an on-site residential property manager?
Manages the day-to-day operations of a single property
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.
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 the best definition for "the time value of money"?
Money gains or loses value over time.
Edmund is a mortgage officer who closes loans. He is a ______________.
Mortgage banker
Carla owns and lives in a four-plex. What type of residential property does Carla own?
Multi-family residential
An industrial development bond is a variety of ______ bond.
Municipal
What does NCUA stand for?
National Credit Union Administration
Which types of stores are usually the magnet stores for a community shopping center?
National department store and a locally prominent supermarket
The building owner is going to be pleased. Keefer just signed another long-term tenant, and he remembered to build in stepped up rental rate increases. Which office building property manager's duty is this?
Negotiating favorable leases
Which of these is generally a commercial property manager's responsibility, but not a residential property manager's responsibility?
Negotiating leases
Other than a percentage lease, what type of lease is used with regional shopping centers?
Net
With a ______ lease, the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately.
Net
Gary leases a commercial building and pays all expenses related to the building, including taxes and insurance. Gary has a ______.
Net lease
Which document includes the size of units, construction, floor plans, amenities, recreation facilities, make and model of appliances, windows, how the landscaping of the property will be maintained, and the actual land on which a condominium building is situated?
Offering plan
Which of the following items does the IRS consider personal tangible property?
Office equipment
Who's responsible for planning promotional activities for a regional shopping center?
On-site property manager and merchants' association
A taxpayer can claim a capital gains exclusion _______.
Once every two years
What is one advantage neighborhood shopping centers have over strip stores?
One central, off-street parking lot
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
A(n) ______ budget helps property managers maximize profitability and avoid unforeseen major expenses and repairs.
Operating
What kind of budget serves two primary purposes: to help property managers maximize profitability and to avoid unforeseen major expenses?
Operating
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
Ken, Dale, and James were brothers who owned more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result was that the court gave each brother a designated set of acres to own. What did the court grant?
Partition
Which type of legal structure may be either general or limited in type?
Partnership
For the vast majority of loans, a single late ______ does not automatically mean the loan has gone into default.
Payment
What type of lease is used most often with community shopping centers?
Percentage
Beneficiary interest in land that's part of a land trust is considered ______.
Personal property
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.
Which of the following best describes foreclosure by writ of entry?
Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed
Which of the following best describes foreclosure by entry and possession?
Petition to enter, repossession, notice of eviction
Your client asks you which properties are multi-family residential. The most complete answer you can give is ______.
Plexes and apartment buildings
Which one of the following is income that comes from investments, which includes capital gains, interest, and dividends?
Portfolio
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 what type of enterprise?
Private
What's the motive of joint venture participants?
Profit
When it comes to a property's highest and best use, which of the following applies?
Profitability
Roger is interested in converting his office building into office condominiums. He's had the building renovated, and filed the appropriate paperwork. What else does Roger need to do as part of the conversion process?
Promote the sale of the condominium offices
Property A is in a highly appreciating area. Property B was assessed identically to Property A five years ago but has lost value. Without periodic reassessments, which of the following is true?
Property A and B would pay the same property taxes
Before a purchase contract can be signed for land that is being sold across state lines, what must developers provide to buyers?
Property report
The use of one investment to finance another is called _______.
Pyramiding
If you and a sibling both inherited your father's property when he died, what type of deed would you need to get from your sibling in order to be the sole owner of the property?
Quitclaim deed
Which REITs make money by incurring short-term debt to acquire longer term mortgage securities, earning the spread between the two rates?
REMTs
What type of real estate investment must distribute 95% of its income to beneficiaries?
Real estate investment trust
When an investment property is sold, three taxes that apply are transfer tax, capital gains, and ______.
Recaptured depreciation
Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property?
Record the deed in his name.
The Tax Cuts and Jobs Act made changes to the AMT that effectively ______.
Reduced the number of people the tax affects
A property's value is dropping because the neighboring property's yard is filled with trash. What's this an example of?
Regression
Which clause found in a promotional land sale agreement states that the property will be released from the underlying lien after the buyer has paid a certain percentage of the balance on the individual lot purchased?
Release
What is one of the first things an office building owner must do to convert property to an office condominium?
Renovate the building
In order to entice tenants to sign a lease agreement with her, Margo is offering to decrease the tenant's first two months' rent. What type of concession is this?
Rental
Which paragraph in a sales contract puts the parties on notice that they are individually and jointly responsible for fulfilling the terms of the contract?
Responsibility and Non-assignability
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
The number of houses sold over a period of time is reflected in what?
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
With a promotional land sale agreement, who usually carries back a portion of the purchase in the form of a purchase-money mortgage or an installment contract?
Seller
How many days after receiving a property report from a subdivision developer do buyers have to cancel their purchase agreement?
Seven
Cooperative owners are actually called ______.
Shareholders
Angus and his partner, Fergus, are so discouraged. All they want is a modest place to call home—not one of those McMansions that they see in every new subdivision. What current market trend is this?
Smaller houses, bigger houses
Under which of the following real estate submarkets would an investment in public storage facilities fall?
Special use
Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?
Stan
Accident liability, fire, theft, and vandalism are types of _______ risk.
Static
Brandon recently purchased an old warehouse building. This building will serve as a hub for local deliveries of fruits and vegetables within the state. During its first week in operation, one of the delivery drivers was involved in an accident that spilled coconuts all over the road and shut down the interstate for hours. What type of risk is this?
Static
Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?
Statute of frauds
What do mortgage bankers prefer to do with loans after they've been made?
Stick with them for the life of the loan.
Which shapes are the most common for community shopping centers?
Straight line, L-shaped, and U-shaped
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?
Strip mall
Sharilyn's business and adjacent businesses are arranged in a neat row. Customers enjoy the open-air walkways when they visit her business and others. In which commercial space is Sharilyn's business likely located?
Strip mall
Which type of commercial property is designed to expand either up or down?
Super-regional shopping center
Which of the following statements describes an off-site residential property manager?
Supervises on-site personnel for multiple properties
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
Which special lease clause stipulates that the tenant is responsible for paying any increase in taxes over the base year's taxes, in addition to the base rent?
Tax
In which form of co-ownership is a person's ownership inheritable?
Tenancy in common
Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively?
Termination of co-ownership by partition
Which one of the following statements about testamentary trusts is true?
Testamentary trusts do not avoid probate.
For whom does a residential property manager work?
The building owner
Tyrone is looking for single-lot investment opportunities. What would be most important for him to research?
The community's growth patterns
Aimee is in the process of taking over property management for a large apartment complex owned by Ginger. What is one thing she should get from Ginger?
The contact information for Handy Manny, the maintenance man
Which of the following statements is true about constructive eviction?
The court may award damages to the tenants.
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
Who or which entity pays the PILOT fee for federal government-owned land?
The federal government
A grantor retained income trust is a type of trust that allows what?
The grantor to receive income
Which of the following occurs if a tenant dies during the term of an estate at will tenancy lease?
The leasehold automatically terminates.
When a borrower has paid off the loan, how is the release handled if the security instrument is a mortgage?
The lender executes and records a satisfaction of mortgage and returns the note to the borrower.
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
Fixed-rate loans are fully amortized. What does that mean?
The loan will pay off its entire principal by the end of the term.
Jake and Eddie have a promissory note agreement that states that Jake will pay back the money he owes Eddie, with interest. Who's required to sign the note?
The maker only
If a minor enters into a contract with an adult, which of the following is true?
The minor may legally hold the adult to the contract, but the adult cannot legally hold the minor to the contract.
Rental property owners are exempt from fair housing laws if which of the following conditions is met?
The owner occupies a building with not more than four families.
The capitalization process uses a capitalization rate, which is based on what?
The performance of comparable properties
Return on investment is another name for what?
The profit made from an investment
Which of the following is a true statement about when a promissory note is sold?
The promissory note is endorsed to the new owner of the loan.
In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain?
The purpose for which the space is being rented
What is capital risk?
The risk that an investor cannot secure financing at an affordable rate
What is financial risk?
The risk that is directly related to leverage
What is business risk?
The risk that the required return on investor capital will not be met
Short-term capital gains are taxed at ______.
The taxpayer's marginal tax rate
During the option period to renew a lease, who determines whether the option will be exercised?
The tenant makes the decision.
The tenants in 2B want to make a few improvements to their leased apartment. The couple would like to rip up the carpet in the living room and have the hardwood floors underneath restored. Which of the following statements about the improvements is true?
The tenants need to get the landlord's permission before they make any improvements to the property.
When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust?
The trustee executes and records a deed of reconveyance and the lender returns the note to the borrower.
Which of the following is a true statement about the relationship between capitalization rate and value?
There is an inverse relationship between the two.
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
An appraiser is using the direct capitalization method to calculate a value for an investment property. Which of the following is true?
This method converts a single year's expected income into a market value.
Stella is an appraiser who's using the direct capitalization method to calculate a value for an investment property. Which of the following is true?
This method converts a single year's expected income into a market value.
How many anchor stores does a super-regional shopping center normally have?
Three or more
Generally, strip store leases are created to run ______________.
Three to five years
Which ADA title prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities?
Title I
Which ADA title is concerned with the accessibility of public accommodations?
Title III
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 is the trustee's role when a deed of trust is used to secure property for a loan?
To hold legal title to the property on behalf of the beneficiary until the loan is repaid
Why should the property manager include a personal note with each monthly report?
To preserve the relationship with the owner
Which type of net lease sometimes requires a tenant to pay the interest payments on the lessor's mortgage on the property in addition to base rent?
Triple net
Marketstreet Restaurant Supply has a debt-to-asset ratio of 12%. Morningside Dairy has a debt-to-asset ratio of 15%. What do these numbers tell us?
Twelve percent of Marketstreet's assets are financed with debt, and 15% of Morningside Dairy's assets are financed with debt.
How many dwelling units does a multi-family residential property have?
Two or more
According to the IRS, how much can active investors deduct from their active taxable income?
Up to $25,000
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.
Sondra thinks the new business contract she's signed with her business partner is valid. Both parties are legally competent, the purpose is a business transaction so it's a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?
Whether consent was voluntary.
Jolene, a bank employee, is asked to manage rental properties that the bank owns. At the very least, she should be given _______.
Written authorization to sign leases
Discounted cash flow analysis and annuity capitalization are forms of ______.
Yield capitalization
