Real estate investment 2
In addition to the two anchor tenants, how many tenants does a community shopping center normally have?
15-40
Which of the following statements is true regarding a tenant's indemnity?
A tenant's indemnity is usually limited to issues on the leased premises and doesn't include claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct.
Which type of alternative financing is also known as an all-inclusive loan?
A wrap-around loan
When calculating square footage in an office building, the hallways, lobby, basement, elevators and elevator shafts, and storage areas ______.
Are considered non-productive space
Which of the following has always had a significant impact on housing demand?
Availability or lack of employment
Dynamic and static risk are considered ________ risks.
Business
Joaquim analyzed a potential opportunity and determined that if he invested $250,000 in the commercial property, he'd likely see a return of 12% on this investment. After several years, Joaquim is seeing a measly 2% return. What type of risk did he fall victim to?
Business risk
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.
Which of the following statements about component depreciation is true?
Components that can be separated out as tangible personal property qualify for component depreciation.
Which of the following led to the 2007 financial crisis and negatively impacted investors that purchased properties in the early 2000s?
Falling home prices
What phrase describes the amount that today's dollars grows to over time?
Future value
Honey is the seller in an installment sale of a residential property. She is paying her capital gains tax through installment sale deferment, and her installment obligations at the end of the tax year will be less than $5 million. Given her situation, which one of the following statements is true?
Honey will only pay taxes proportionate to the gain collected each year.
What's the formula used to calculate monthly simple interest on a loan?
Loan balance x interest rate ÷ number of payments annually
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
What is one advantage neighborhood shopping centers have over strip stores?
One central, off-street parking lot
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
The Tax Cuts and Jobs Act made changes to the AMT that effectively ______.
Reduced the number of people the tax affects
Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?
Rent
Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf?
Represent her client's interest in all negotiations and transactions regarding the lease of the property.
Upon examination of Stevens and Smith's financial statements, their stockholders discover a debt-to-income ratio of 25%. Babson's financial statements indicate a debt-to-income ratio of 33%. Which of these comparison statements is accurate?
Stevens and Smith carries a smaller percentage of debt relative to its income than Babson.
Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end?
The lease continues on a month-to-month basis.
Fixed-rate loans are fully amortized. What does that mean?
The loan will pay off its entire principal by the end of the term.
What is maximum equity?
The maximum amount the borrower is willing/able to invest
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.
Why may a developer have to pay impact fees?
To address the burden on existing infrastructure caused by the development
What's the purpose of an assessor's parcel number?
To identify a property for tax purposes
Another name for a coupon bond, which is rarely issued anymore, is the _____bond.
bearer
All trusts have three parties: the trustor, the trustee, and the ______.
beneficiary
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
Capitalization is the process of converting ______.
income to value
A property valued at $1 million is returning a net annual income of $85,000. What's its cap rate?
8.5%
Which of the following could be subject to a gift tax?
A gift of $17,000 to your son
Agnus is an investor who's seeking a single lot that was recently rezoned from single-family to commercial. Why is this?
Agnus knows that the value of the land has increased with the rezoning.
Which of the following acts requires office buildings to be accessible to individuals with a disability, such as those who use wheelchairs?
Americans with Disabilities Act
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.
Which of the following investors is exempt from fair housing laws?
An investor who owns fewer than three single-family homes
Which of the following is the best example of investment leverage?
Financing most of an investment and putting very little cash in
Cooperative shareholders under a condop structure have ______.
Flexibility in selling and subletting, similar to that of condominium owners
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
Under which type of ownership arrangement can buyers purchase condominiums?
In severalty, in joint tenancy, in tenants in common, or tenants by the entirety
Why do investors have a special interest in the impact income taxes have?
Income tax is a significant factor in return on investment.
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.
Calculating the return on investment can be a part of determining a property's ______.
Investment value
What does income shelter mean?
It means that the income received is sheltered from taxation.
Milo is interested in converting his rental properties into condominiums. He's completed his feasibility study and determined that the conversion costs will pay for themselves at sale time and the market will support the conversion. What else does Milo need to do prior to conversion?
Make certain the conversion will be allowed by the local government
Which of these are the two primary REIT types?
Mortgage and equity
Which of the following statements about topography in land investments is true?
Physical features of the land factor into development costs.
If a borrower fails to keep homeowners insurance on the collateral property, which of the following are actions the lender can take?
Place lender-acquired insurance on the property and bill the borrower
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
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
Which of the following involves street specifications, lot size, single- or multi-family dwellings, utilities provided and easements, how far houses must be set back from property lines, and drainage requirements?
Subdivision regulations
Which of the following is true about the GRM method?
The method can't be used alone as an indication of value for residential property.
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.
The capitalization process uses a capitalization rate, which is based on what?
The performance of comparable properties
Your real estate investor client, Annalise, has an investment plan that includes purchasing several acres of property downtown, but the deal suddenly falls apart. Because she is an experienced, smart investor, Annalise knows the smart thing to do next is ______.
Walk away from the property, and move onto another one.
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
With which type of lease do tenants pay their base rent plus a percentage of their gross sales?
percentage
How many dwelling units does a multi-family residential property have?
two or more
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?
variable
