REE3043 FSU-Broxterman "Foundations" Exam 1 ||\\//|| ||\\//|| ||\\//|| ||\\//||
Review questions with verified detailed answers
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Real Estate - correct answer✔✔Land and permanent improvements, whether natural or
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
artificial. Defining characteristic: immovable ||\\//|| ||\\//|| ||\\//||
Realty - correct answer✔✔immovable possessions
||\\//|| ||\\//|| ||\\//|| ||\\//||
Chattel - correct answer✔✔moveable possessions||\\//|| ||\\//|| ||\\//|| ||\\//||
Types of Real Estate Categories used by Lenders - correct answer✔✔Residential,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Commercial, and Land ||\\//|| ||\\//||
Residential- Lenders - correct answer✔✔-1 to 4 unit buildings and land suitable for ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
dwelling use ||\\//||
-"unit" means it has own entrance, kitchen, and bath
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Commercial- Lenders - correct answer✔✔-All real estate other than residential ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Including 4+ unit multi-family dwellings (apartments, condos) ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Land- Lenders - correct answer✔✔-raw land: still in natural state
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-improved site: some upgrades that make it more usable. example: utility connections,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
sewer piping, electrical/gas connections, etc.
||\\//|| ||\\//|| ||\\//|| ||\\//||
Types of Real Estate Categories used by Investors - correct answer✔✔Residential, Office,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Industrial, Retail, Specialty ||\\//|| ||\\//||
,Residential- Investors - correct answer✔✔-single family, multi family ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Industrial- Investors - correct answer✔✔manufacturing, warehouse, flex/R&D ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Retail- Investors - correct answer✔✔-mall
||\\//|| ||\\//|| ||\\//|| ||\\//||
-neighborhood, power, lifestyle centers ||\\//|| ||\\//|| ||\\//||
Specialty- Investors - correct answer✔✔lodging (ex. hotel properties), medical, senior,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
storage, student ||\\//||
"four food groups" - correct answer✔✔Multi-family residential, Office, Industrial, Retail
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-"ROIM"
Quality of Physical Asset- Metropolitan Based - correct answer✔✔Class A, Class B, Class C
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Class A - correct answer✔✔-commands highest rent
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-most prestigious locations, tenants, and amenities
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-low effective age
||\\//|| ||\\//||
Class B - correct answer✔✔-lower rent than class A
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-less desirable location/amenities
||\\//|| ||\\//||
Class C - correct answer✔✔-older with renovation needed, still reasonably well maintained
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-lower credit tenants ||\\//|| ||\\//||
, Geography - correct answer✔✔-Primary (Tier 1), Secondary (Tier 2), Tertiary (Tier 3) ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Gateway cities: think most important real estate markets in the world (ex. Boston, Chicago,||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
LA, New York, Miami, etc.)
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
User (Space) Market - correct answer✔✔Trade use of real estate space for money
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Demanders: tenants, owner occupants ||\\//|| ||\\//|| ||\\//||
-Suppliers: property owners ||\\//|| ||\\//||
*Market where RENTS are determined ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Local and segmented, supply and demand ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Capital (Asset) Market - correct answer✔✔Trade rights to receive cash flows generated by
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
real estate||\\//||
-competes for funds with other asset classes, such as stocks and bonds ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
*Market where REQUIRED RETURNS are determined ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-based on other investment opportunities, not as segmented as user market
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Valuation - correct answer✔✔asset values are determined by interaction of user and capital ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
markets
Methods for converting rent flow into asset value: ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Capitalization: divide single year of expected net income by cap rate ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Discounting: find present value of expected net income using required rate of return ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Market-Level Measures of Price: Average Method - correct answer✔✔-NAR collects sales ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
prices of EXISTING homes ||\\//|| ||\\//|| ||\\//||
-Census collects sales prices of NEW homes ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Many providers for commercial rent averages ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Review questions with verified detailed answers
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Real Estate - correct answer✔✔Land and permanent improvements, whether natural or
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
artificial. Defining characteristic: immovable ||\\//|| ||\\//|| ||\\//||
Realty - correct answer✔✔immovable possessions
||\\//|| ||\\//|| ||\\//|| ||\\//||
Chattel - correct answer✔✔moveable possessions||\\//|| ||\\//|| ||\\//|| ||\\//||
Types of Real Estate Categories used by Lenders - correct answer✔✔Residential,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Commercial, and Land ||\\//|| ||\\//||
Residential- Lenders - correct answer✔✔-1 to 4 unit buildings and land suitable for ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
dwelling use ||\\//||
-"unit" means it has own entrance, kitchen, and bath
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Commercial- Lenders - correct answer✔✔-All real estate other than residential ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Including 4+ unit multi-family dwellings (apartments, condos) ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Land- Lenders - correct answer✔✔-raw land: still in natural state
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-improved site: some upgrades that make it more usable. example: utility connections,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
sewer piping, electrical/gas connections, etc.
||\\//|| ||\\//|| ||\\//|| ||\\//||
Types of Real Estate Categories used by Investors - correct answer✔✔Residential, Office,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Industrial, Retail, Specialty ||\\//|| ||\\//||
,Residential- Investors - correct answer✔✔-single family, multi family ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Industrial- Investors - correct answer✔✔manufacturing, warehouse, flex/R&D ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Retail- Investors - correct answer✔✔-mall
||\\//|| ||\\//|| ||\\//|| ||\\//||
-neighborhood, power, lifestyle centers ||\\//|| ||\\//|| ||\\//||
Specialty- Investors - correct answer✔✔lodging (ex. hotel properties), medical, senior,
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
storage, student ||\\//||
"four food groups" - correct answer✔✔Multi-family residential, Office, Industrial, Retail
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-"ROIM"
Quality of Physical Asset- Metropolitan Based - correct answer✔✔Class A, Class B, Class C
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Class A - correct answer✔✔-commands highest rent
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-most prestigious locations, tenants, and amenities
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-low effective age
||\\//|| ||\\//||
Class B - correct answer✔✔-lower rent than class A
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-less desirable location/amenities
||\\//|| ||\\//||
Class C - correct answer✔✔-older with renovation needed, still reasonably well maintained
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-lower credit tenants ||\\//|| ||\\//||
, Geography - correct answer✔✔-Primary (Tier 1), Secondary (Tier 2), Tertiary (Tier 3) ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Gateway cities: think most important real estate markets in the world (ex. Boston, Chicago,||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
LA, New York, Miami, etc.)
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
User (Space) Market - correct answer✔✔Trade use of real estate space for money
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Demanders: tenants, owner occupants ||\\//|| ||\\//|| ||\\//||
-Suppliers: property owners ||\\//|| ||\\//||
*Market where RENTS are determined ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Local and segmented, supply and demand ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Capital (Asset) Market - correct answer✔✔Trade rights to receive cash flows generated by
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
real estate||\\//||
-competes for funds with other asset classes, such as stocks and bonds ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
*Market where REQUIRED RETURNS are determined ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-based on other investment opportunities, not as segmented as user market
||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Valuation - correct answer✔✔asset values are determined by interaction of user and capital ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
markets
Methods for converting rent flow into asset value: ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Capitalization: divide single year of expected net income by cap rate ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Discounting: find present value of expected net income using required rate of return ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
Market-Level Measures of Price: Average Method - correct answer✔✔-NAR collects sales ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
prices of EXISTING homes ||\\//|| ||\\//|| ||\\//||
-Census collects sales prices of NEW homes ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
-Many providers for commercial rent averages ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
