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At the end of 8 years, your friend wants to have $50,000 saved for a down payment on a house. He expects to earn 8%—compounded monthly—on his investments over the next 8 years. How much would your friend have to put in his investment account each month to reach his goal?
What document usually summarizes the sources, disbursements, charges and credits associated with a real estate closing?
(A) The purchase contract
(B) The deed of trust
(C) The listing agreement
(D) The settlement statement
An appraisal usually contains three approaches to valuation. Which of the following is NOT one of those approaches?
(A) The Market Approach
(B) The Ratio Approach
(C) The Cost Approach
(D) The Income Approach
The subject of an appraisal has only two bedrooms, but one of the comparables used in the appraisal has three. If the adjustment for a third bedroom is $5,000, the adjustment would be:
(A) A $5,000 increase to the comparable’s selling price
(B) A $5,000 decrease to the comparable’s selling price
(C) A $5,000 increase to the subject’s selling price
(D) A $5,000 decrease to the subject’s selling price.
Which of the following is NOT a good method of title assurance?
(A) Seller provides a warranty in the deed
(B) An attorney searches recorded documents
(C) Title insurance is purchased
(D) Seller provides a quitclaim deed
For which of the following reasons would a business prefer to own space rather than lease it?
The business demands specialized or unique facilities
Owning allows the business to develop skills in operating, maintaining, and repair real estate and the associated facilities
Owning reduces operating flexibility
The capital commitments with owning are lower than the capital commitments associated with leasing
All of the above are reasons a business would prefer to own space rather than lease it
A building owner charges net rent of $20 in the first year, $21 in the second year, and $22 in the third year. Using a 10 percent discount rate, what is the effective rent over the three years?
Which of the following is FALSE regarding cap rates?
(A) Excess supply tends to drive cap rates up
(B) Rising interest rates generally tends to lower cap rates
(C) Excess demand and falling interest rates results in lower cap rates
(D) Excess demand leads to lower cap rates
Which of the following leads to rent premiums?
(A) Apartments on periphery of site, higher floors with no elevators
(B) Second or third levels in multi-level malls
(C) Middle floors in office building
(D) Apartments on higher floors with elevators
Which of the following is TRUE for a net lease?
(A) All expenses are paid by the owner
(B) All expenses are paid by the tenant
(C) All expenses are paid by the lender
(D) All expenses are paid by the investor
Which of the following tends to lower effective rents?
(A) Percentage rent
(B) Step up provisions
(D) CPI adjustment
Which of the following is NOT a requirement of REITs?
(A) A REIT must have at least 100 stockholders
(B) Not more than 50% of a REIT’s shares can be owned by five or fewer shareholders
(C) At least 95% of a REIT’s income must be distributed to shareholders
(D) All of the above are REIT requirements
An investor is considering renovating a building. The total cost of renovation is expected to be $100,000, of which 75% can be borrowed. Given the after-tax cash flows to the equity investor as showed below, what is the incremental return from renovating?
1 2 3 4 5
ATCF after renovation 9,200 10,000 12,000 14,000 316,000