Real Estate Finance & Investments (Real Estate Finance and Investments) 14th Edition

While most real property in the United States is privately owned, government regulations limit private property use and therefore play an important role in the determination of property value. Proponents of government intervention argue that regulation is needed to address the unintended and unaccounted for consequences of one land user

Operating expenses can be divided into two categories: variable and fixed expenses. Which of the following best exemplifies a fixed expense? A. Utilities B. Property management C. Local property taxes D. Trash removal Answer: C Answer: C Answer: C Mortgage originators can either hold loans in their portfolios or sell them to investors. When a mortgage originator

Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between: A. 1-5 years B. 5-7 years C. 7-15 years D. 15-30 years Answer: D Answer: D Answer: D A tool used by real estate analysts to relate a consumer's activities, interests,

The risk of bankruptcy tends to travel with the risk of foreclosure since both can result from financial distress. Known popularly by its section in the Federal Bankruptcy Code, which of the following types of bankruptcy is a court-supervised workout for a troubled business? A. Chapter 1 bankruptcy B. Chapter 7 bankruptcy C. Chapter 11

Given the following information, calculate the debt coverage ratio for this investment. Potential gross income: $120,000, Vacancy rate: 9%, Net operating income: $57,900, Operating expenses: $51,300, Acquisition Price: $520,000, Debt service: $40,000. A. 0.69 B. 1.45 C. 2.73 D. 8.29 Answer: B Answer: B Answer: B Upon starting his first job after graduation, Jon has completed the

After a structure is built, it is impractical for even a building expert to fully assess the quality of the construction and the safety hazards it may harbor. This is an example of which of the following problems that plagues private real estate markets? A. Externalities B. Incomplete information C. Locational monopoly D. Holdout

Any contract, whether it is for the sale of real estate or some other entity, must contain five basic elements. However, any contract for the sale of real estate must adhere to two additional requirements. Which of the following contract elements is an additional requirement that must be satisfied in a

Property rights created from marriage have a clear implication for real estate transactions. Which of the following marital property rights gives a spouse a one-half claim on all property acquired "from the fruits of the marriage?" A. Dower B. Curtesy C. Elective share D. Community property Answer: D Answer: D Answer: D Given the following information, calculate

A tenant who expects her business to grow may wish to have a clause included in her lease that grants her the choice to lease adjacent space as soon as it becomes available. This lease option is more commonly referred to as a: A. relocation option B. right of first refusal C. renewal

Consider the following excerpt from a sample deed: "The Seller covenants with The Buyer that it has a good right to convey, that the property is free from all encumbrances, and that it forever warrants to defend all of the property so granted to The Buyer against every person lawfully claiming the

A client has requested advice on a potential investment opportunity involving an income producing property. She would like you to determine the internal rate of return of the investment opportunity based on the following information. Expected Holding Period: 5 years; End of first year NOI estimate: $113,900; NOI estimates in subsequent years

FHA mortgage insurance covers any lender loss after conveyance of title of the property to the U.S. Department of Housing and Urban Development (HUD). FHA mortgage insurance requires two premiums to be paid: the UFMIP (up-mortgage insurance premium) and the MIP (monthly insurance premium). Currently, the UFMIP is what percentage of

Most research oriented universities have many different colleges, each with separate administrations, students, curricula, and facilities. However, the university continues to exist as a total unit because of: A. industry economies of scale B. locational monopoly C. economic inefficiencies D. negative externalities Answer: A Answer: A Answer: A Given the following information, calculate the total annual tax

Assume a retail tenant is paying a base rent of $120,000 per year (or $10,000 per month). In addition, the tenant must pay 7 percent of gross store sales in excess of $143,000 per month as percentage rent. If the store produces $170,000 in gross sales in a month, what

When discussing time-value-of-money it is necessary to understand some key terminology. Which of the following terms refers to a fixed amount of money paid or received at the end of every period (i.e. a series of equal lump sums)? A. Future value B. Present value C. Ordinary annuity D. Annuity due Answer: C Answer: C Answer:

Adjustments for physical characteristics are intended to capture the dimensions in which a comparable property differs physically from the subject property. If the only physical difference between the subject property and the comparable is that the comparable does not have a fireplace, which of the following adjustments should take place? A.

Suppose you have taken out a $125,000 fully-amortizing fixed rate mortgage loan that has a term of 15 years and an interest rate of 6%. After your first mortgage payment, how much of the original loan balance is remaining? A. $1,054.82 B. $120,603.78 C. $124,570.18 D. $124,875.56 Answer: C Answer: C Answer: C A public planning movement

The recent emergence of discount brokerage services has had a modest effect on the price of brokerage services. The average commission that a broker could expect to receive today would most likely range between: A. 1-2% B. 3-4% C. 5-6% D. 7-10% Answer: C Answer: C Answer: C Which of the following types of institutions has historically

For most commercial property types, lease lengths can vary considerably. Therefore, both parties must tradeoff between the advantages and disadvantages associated with particular leasing terms. Owners may prefer longer leases for all of the following reasons EXCEPT: A. Delay of re-leasing costs B. Reduction of risk associated with declining interest rates C. Gain

Capital markets can be divided into two broad categories: equity interests and debt interests. Equity investors in real estate expect to earn a return on their investment through: A. The collection of rent and price appreciation B. The collection of interest on the borrowed funds used to purchase the property C. The receipt