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 is the total rent due for the month?
A. $10,000
B. $10,158
C. $11,890
D. $21,900
In recent years, home equity loans have become a popular form of second mortgage.
Their popularity has been a result of all of the following EXCEPT:
A. Lower interest rates than other consumer debt
B. Shorter terms than other consumer debt
C. Tax-favored status
D. Aggressive marketing by lenders
Preferences of households can vary with time, prosperity, and context. The nuances in
the preferences or needs of market subgroups are commonly referred to as:
A. market segmentation
B. market parameters
C. market projection
D. market cycles
A planned unit development (PUD) is a residential development that differs from
traditional residential subdivisions in all of the following ways EXCEPT:
A. It encompasses a blend of detached single family, attached single family, townhouses
and apartments.
B. It typically has larger individual lots with extensive side-yards on the property.
C. It typically includes a variety of common areas
D. It typically includes a variety of recreational facilities.
A developer plans to place a subdivision slightly outside the city limits in an area that is
rapidly developing. However, the city claims to have the right to control urban
development even in the proposed area. The right the city is attempting to invoke is
referred to as:
A. extraterritorial jurisdiction.
B. urban service area.
C. comprehensive plan.
D. growth constraint.
While several kinds of real property conveyances result from events beyond the control
of the grantor, the majority of conveyances are voluntary through a deed. Which of the
following is an example of a voluntary conveyance of real property with a deed?
A. Patent
B. Probate
C. Condemnation
D. Implied Easement
Which of the following types of direct co-ownership is a form of joint tenancy for
husband and wife created by marriage that protects each spouse from liens arising from
either spouse alone?
A. Tenancy in common
B. Tenancy by the entirety
C. Condominium
D. Tenancy at Will
The type of deed offered by the grantor is communicated through a phrase such as
“does herby grant, bargain, sell and convey unto . . .” This clause is referred to as the:
A. recital of consideration
B. words of conveyance
C. covenant
D. habendum clause
While some property owners choose to perform both the property and asset manager
functions themselves, many commercial property owners choose to employ
professional property managers instead. The property manager works under a
management contract in which the manager is empowered to serve as the owner’s
fiduciary. This type of relationship is more commonly referred to as a(n):
A. agency relationship
B. open listing relationship
C. joint-venture
D. correspondent relationship
Different financing requirements usually are involved in the various phases of a
property’s life. Which of the following types of loans is used to finance improvements
to the land, such as sewers, streets and utilities?
A. Land acquisition loans
B. Land development loans
C. Construction loans
D. Bridge loans
Given the following information, calculate the effective gross income. Property: 4
office units, Contract rents per unit: $2500 per month, Vacancy and collection losses:
15%, Operating Expenses: $42,000, Capital Expenditures: 10%
A. $100,000
B. $102,000
C. $120,000
D. $135,000
In dual agency, conflicts of interest may arise since a single broker has both the listing
contract with the seller and a buyer agency agreement with the purchaser. One way that
states have attempted to deal with this issue is to develop a new type of brokerage
relationship in which the broker assists the buyer and seller, but does not represent
either party. This type of brokerage relationship is commonly referred to as:
A. unintended dual agency
B. universal agency
C. transaction brokerage
D. multiple listing
When a mortgage is used as collateral for the issuance of a mortgage-backed security
(MBS), the underlying mortgage is said to be ‘securitized.” As of the end of 2010,
approximately what percentage of residential mortgage loans in the U.S. was being sold
into the secondary market and being used as collateral for the issuance of MBS?
A. 25%
B. 40%
C. 85%
D. 100%
Suppose a developer is interested in building a new apartment community. Through her
market research, the developer has determined that the target market segment potential
in year 1 consists of 100 households. The developer believes that the target market
segment potential will grow by 5% annually over the next five years. If the developer
projects a capture rate of 25% for each of the next five years, but is only to sell 26
apartment units in each of the next five years, in which year will her actual sales first
fail to meet her projected sales numbers?
A. Year 2
B. Year 3
C. Year 4
D. Year 5
Since most data for a given market study is not readily available, analysts must be
creative in their use of data that they are able to obtain. The primary source for detailed
household demographic information is:
A. the U.S. Bureau of the Census
B. the Federal Reserve
C. the local tax collector’s office
D. Not available publicly
Given the following information on a fixed-rate fully amortizing loan, determine the
maximum amount that the lender will be willing to provide to the borrower. Loan Term:
30 years, Monthly Payment: $800, Interest Rate: 6%.
A. $6,707
B. $9,295.15
C. $13,333
D. $133,433
Since hazard insurance premiums are paid up-front, the buyer will have to reimburse
(credit) the seller a portion of the premium at the closing. Suppose that the insurance
policy’s coverage began on December 15th of the prior year and the property transaction
is set to close on March 16th of a 365-day year. The premium paid originally by the
seller was $250. If the coverage will expire as of the end of day December 14th in the
current year, what is the dollar amount that the buyer must credit the seller?
A. $0.00
B. $62.33
C. $187.67
D. $250.00
Given the following information, calculate the going-out cap rate. Estimated holding
period: 5 years, NOI for year 1: $120,000, NOI for year 5: $150,000, NOI for year 6:
$155,250, Expected sale price at end of year 5: $1,350,000.
A. 8.9%
B. 11.1%
C. 11.5%
D. 11.9%
As with any valid contract, enforceable leases must meet a number of requirements.
One of these requirements is for each party to provide appropriate consideration. In a
lease, which of the following constitutes the landlord’s consideration?
A. Promise to pay rent
B. Passing on legal title to the property
C. Permission to occupy the space or property
D. Commission to the leasing agent
The national government can have a significant impact on the value of real estate
through:
A. property tax policy
B. income tax policy
C. building Codes
D. real estate licensing requirements
Given the following information, calculate the price-FFO multiple for the following
REIT. Funds from Operation: $4,000,000; Stock Price: $40; Shares Outstanding:
1,000,000
A. 0.10
B. 0.25
C. 4.00
D. 10.00
In contrast to public markets, private markets are characterized by individually
negotiated transactions that take place without the aid of a centralized market.
Therefore, private markets will generally have:
A. High transaction costs and high liquidity
B. High transaction costs and low liquidity
C. Low transaction costs and high liquidity
D. Low transaction costs and low liquidity
An investor just purchased an office building for $100,000. He knows for certain that he
can sell the building for $110,000 in 5 years. Approximately how much does he need
to charge in annual rent in order to achieve a 15% annual return on the deal (rounded to
the nearest hundred dollars)?
A. $2,500
B. $8,000
C. $13,500
D. $20,500
In retail property types, rents are quoted on the basis of which of the following?
A. Usable area
B. Gross floor area
C. Gross leasable area
D. Rentable area
Three highly similar and competitive income-producing properties within two blocks of
the subject property have sold this month. All three offer essentially the same amenities
and services as the subject property. The sale prices and estimated first-year NOI for
each of the comparable properties are as follows:
Using the information provided, calculate the overall capitalization rate by direct
market extraction assuming each property is equally comparable to the subject.
A. 11.0%
B. 11.2%
C. 11.4%
D. 12.0%
When viewed as a tangible asset, real estate can be defined as the land and its
permanent improvements. Improvements on the land include:
A. fences
B. walkways
C. sewer systems
D. streets
Mortgage insurance rates vary with the perceived riskiness of the loan. Which of the
following scenarios would result in a higher mortgage insurance premium?
A. Lower loan-to-value ratio
B. Shorter loan term
C. Stronger credit record of the borrower
D. A “cash-out” refinancing loan
You have taken out a $225,000, 3/1 ARM. The initial rate of 5.8% (annual) is locked in
for 3 years and is expected to increase to 6.5% at the end of the lock period. Calculate
the initial payment on the loan. (Note: the term on this 3/1 ARM is 30 years)
A. $1,320.19
B. $1,422.15
C. $1,874.45
D. $1959.99
Given the following information, calculate the appropriate going-in cap rate using
general constant-growth formula. Overall market discount rate = 12%, Constant growth
rate projection: 3% per year, Sale price: $1,950,000, Net operating income: $390,000,
Potential gross income: $520,000.
A. 8%
B. 9%
C. 10%
D. 11.5%
Given the following information, calculate the straight-line depreciation rate for the
first year using the midmonth convention. Cost recovery period: 27 years, Date of
purchase: April 10th.
A. 2.6%
B. 3.63%
C. 19.5%
D. 70.8%
Assume that a piece of land is currently valued at $50,000. If this piece of land is
expected to appreciate at an annual rate of 5% per year for the next 20 years, how much
will the land be worth 20 years from now?
A. $100,898.99
B. $112,633.09
C. $123,860.81
D. $132,664.89
A contemporary planning movement that explicitly advocates a traditional grid pattern
of development designed to give pedestrian life priority over motor vehicles (e.g.,
including narrowed streets with houses close to the street and garage access through
side alleys) is commonly referred to as:
A. urban sprawl
B. urban service area
C. traditional residential planning
D. new urbanism
While leasehold interests are considered estates, they differ from freehold estates in all
of the following respects EXCEPT:
A. Leasehold estates are limited in time.
B. The right of disposition is diminished with a leasehold estate.
C. Leasehold estates are not titled interests.
D. Leasehold estates are possessory interests