Real estate Investments / champions Exam 2023 Questions with Verified Answers

if you are holding undeveloped land, your goal as an investment is: - Answer- appreciation land is referred to as _____ because it can be seen touched - Answer- tangible Formaldehyde gas is: - Answer- Colorless Local governments can use which of the following to enforce subdivision requirements? - Answer- Police Power The time limitation on deed restrictions is typically __________ due to changes that render the original restriction irrelevant. - Answer- 25-35 years Which of the following is a rating used for investment opportunities? - Answer- All of these are ratings used for investment opportunities Which phase assessment defines the steps needed to clean up contaminated areas of a property? - Answer- Phase III Assessment The ________, authorized in 1954, was the first program of Urban Planning Assistance - Answer- Subdivision Act Which of the following are potentially responsible parties for clean-up costs of an environmental problem? - Answer- The party who transported the waste The right of ___________ includes the right to sell or mortgage property and the right to determine the duration of the ownership term. - Answer- Disposition from which country's laws did community property stem? - Answer- Spain A ______ is a written instrument by which a grantor conveys an ownership interest in real property to a grantee - Answer- Deed Which of the following would be considered a trade fixture? - Answer- Dentist Chair In a lease, the landlord is referred to as the __________. - Answer- Lessor The lessee in a lease agreement is also known as the ________ - Answer- Tenant _____________ compensates a seller for taking a property off the market for an extended period of time - Answer- Earnest Money _________ is typically stated as a monthly charge to be paid by the tenant at the beginning of each month - Answer- Rent A(n) ________ is the legally designated person who would be entitled to receive a deceased person's property in absence of a will. - Answer- Heir Profit realized in the sale, exchange or disposition of a capital asset is considered ___________. - Answer- Capital Gain Income In determining capital gains on inherited property, the basis of value generally becomes market value as of ______________. - Answer- The date of the decedent's death In terms of qualifying for low-income housing tax credits, __________ means the initial lease term extends to 6 months or more. - Answer- Nontransient The gross rent charged to a tenant living in low-income housing cannot exceed ____% of the qualifying income level for the tenant's family size - Answer- 30 Which of the following costs of the principal residence can a homeowner deduct from ordinary taxable income? - Answer- All of these costs are allowable tax deductions The IRS defines a(n) _________ as one in which the taxpayer receives at least one payment after the year of sale. - Answer- Installment Sale __________ is also known as earned income. - Answer- Active The main difference between a commercial loan and a residential loan is that the lender and investor expect the ___________ to repay the commercial loan. - Answer- Property being acquired A(n) ________ permits the lender to share in all the benefits derived from the property - Answer- Equity participation The "banker's rate" considers a day _____ of the annual rate. - Answer- 1/360 The Truth-in-Lending Act is implemented by _________ - Answer- Regulation Z A consortium of people or institutions that come together to share funding and/or expertise in a particular business endeavor, often real estate investment, is called a ____________ - Answer- Syndicate For tax purposes, a dwelling may be a(n): - Answer- Mobile home, house, boat, all of these How much does the handicap exception allow a taxpayer to deduct per year? - Answer- up to $25,000 All taxable income of a sole proprietorship must be reported as part of the individual owner's income or loss on Schedule C, Form ___________, "Profit (or Loss) from Business or Profession" of the federal tax forms - Answer- 1040 Which of the following is an item commonly reported on Schedule K? - Answer- Net Self-employment income, ordinary income, ordinary loss. A _____________ details the assets and liabilities of a person or business at a particular point in time. - Answer- Balance Sheet The _________ to appraisal estimates a property's value based on the income derived from it. - Answer- Income Approach The three basic financial statements covered in Chapter 11 of the text are the balance sheet, the profit-and statement, and the - Answer- Operating statement __________ expenses remain stable regardless of occupancy. - Answer- fixed The maximum income that a property can be expected to produce at full occupancy is referred to as - Answer- The maximum income expected of a property at full occupancy is variously called all of these Which of the following is a category in which depreciation can be found? - Answer- Depreciation can be found in all of these categories Which appraisal approach to value concentrates on the sales prices of similar properties? - Answer- Market approach The ____________is the sum of operating expenses and annual debt service divided by the property's potential gross income. - Answer- Breakeven ratio The _________ ratio compares the total investment in the property with the NOI. - Answer- Profitability The ______ value of an investment is the current value grown at some predetermined interest rate for a set period of time. - Answer- Future How is equity calculated in a cash flow projection? - Answer- Subtracting the first mortgage and second mortgages from the purchase price According to Chapter 14, __________ are the most important considerations in evaluation an investment. - Answer- Cash Flow the ___________ is the discount rate that forces the NPV to zero. - Answer- IRR Which of the following is NOT an annuity? - Answer- Varying rental payments The __________ is calculated by dividing the Net Operating Income by the Purchase Price. - Answer- Cost of sale Dividing the Gross Scheduled Income into the Purchase Price gives you the _________ - Answer- Gross Rent Multiplier For single cash flows, the present value is the ___________ the future value. - Answer- Inverse of Calculate the cap rate for a $750,000 property with an NOI of $80,000 - Answer- 10.7% The Act that attempts to remove barriers of access to public facilities for disabled individuals is the - Answer- Americans with Disabilities Act The type of lease in which the tenant pays for rent, maintenance and operating expenses of the premises is the _________ lease. - Answer- Net lease Which of the following does NOT determine the trade area of a retail store center? - Answer- Drawing a circle around an area on a map Which of the following is an exception to the handicapped provision? - Answer- A dangerous drug-addicted tenant According to the text, which of the following is not considered a utility? - Answer- WIFI According to the text, which of the following is not considered a utility? - Answer- All of these are included in the ADA, Day Care, Grocery Store, Hotels The term lease is also called the ____________ - Answer- Gross lease _______ allows land developers access to temporary borrowed funds to build homes until permanent financing can be arranged. - Answer- Gap financing The normal ratio between the net and gross leasable areas holds that ____% of the total area is usable for tenants' offices with ____%