REE 3043 LATEST 2026 STUDY GUIDE QUESTIONS AND
SOLUTIONS GRADED A+
✔✔When does the creation of equitable title occur in the contract for sale process? -
✔✔The contract for sale is signed
✔✔What is the timeframe for lenders to provide an estimate of loan costs under
RESPA? - ✔✔3 business days
✔✔What form includes details pertaining to specific loan information and an estimate of
expenses for the borrower? - ✔✔Loan estimate
✔✔What is the term for when one party's contractual rights and obligations are
transferred to someone else? - ✔✔Assignment
✔✔What is an additional requirement that must be satisfied in a contract for sale of real
estate? - ✔✔Proper description of the property
✔✔What is the value given up or promise made by each party in a contract referred to
as? - ✔✔Consideration
✔✔What is an additional requirement for contracts for the sale of real estate? -
✔✔Written form
✔✔What legal instrument must be in place for personal representatives and trustees to
act on behalf of a principal? - ✔✔Power of attorney
✔✔In a contract for the sale and purchase of real estate, what depicts the seller's
consideration? - ✔✔The property to be given up
✔✔What can the net operating income of a property be viewed as in analogy to the
stock market? - ✔✔Annual dividend expected to be produced by the property
✔✔Which ratio shows investors the percentage of their initial equity investment
expected to be returned in cash during the next 12 months? - ✔✔Cash-on-cash return
✔✔What is an example of a profitability ratio in commercial real estate investment? -
✔✔Cash-on-cash return
✔✔What group of metrics provides a quick assessment of whether a property appears
to be priced reasonably relative to its income? - ✔✔Income multipliers
, ✔✔How does the cash-on-cash return handle the effect of mortgage financing? -
✔✔Subtracts the effects of mortgage financing from both the numerator and the
denominator
✔✔What does the 'above-line' treatment of capital expenditures imply in calculating
NOI? - ✔✔Capital expenditures are included in the calculation of NOI
✔✔What is the term for how cash flows generated by a property are distributed to
various investor classes? - ✔✔Waterfall
✔✔What is the typical range for an investor's targeted operating expense ratio by
property type? - ✔✔25-50%
✔✔What is a limitation associated with calculating returns, ratios, and multipliers in
single-asset real estate investment decisions? - ✔✔They fail to incorporate cash flows
beyond the first year of the analysis
✔✔What is the maximum federal income tax rate on individuals as of 2022? - ✔✔37%
✔✔How do capital expenditures differ from operating expenses? - ✔✔They add to the
market value of the property
✔✔In some commercial property operating agreements, what are investors scheduled
to receive? - ✔✔Their 'pro rata' share of all cash flow distributions
✔✔What proportion of all future cash flows is an investor entitled to if they contributed
1/10 of the required equity investment? - ✔✔10.0%
✔✔How does BTCF differ from NOI in terms of financial leverage? - ✔✔BTCF is a
levered cash flow, while NOI is an unlevered cash flow.
✔✔Which ratio measures the overall income-producing ability of a property? -
✔✔Capitalization rate.
✔✔What percentage of the acquisition price do commercial mortgage lenders generally
require the senior mortgage not to exceed? - ✔✔65 to 75%.
✔✔Which property type is expected to have the lowest relative going-in capitalization
rate? - ✔✔Apartment.
✔✔Which class of properties is expected to have the lowest cap rates on average? -
✔✔First tier properties.
SOLUTIONS GRADED A+
✔✔When does the creation of equitable title occur in the contract for sale process? -
✔✔The contract for sale is signed
✔✔What is the timeframe for lenders to provide an estimate of loan costs under
RESPA? - ✔✔3 business days
✔✔What form includes details pertaining to specific loan information and an estimate of
expenses for the borrower? - ✔✔Loan estimate
✔✔What is the term for when one party's contractual rights and obligations are
transferred to someone else? - ✔✔Assignment
✔✔What is an additional requirement that must be satisfied in a contract for sale of real
estate? - ✔✔Proper description of the property
✔✔What is the value given up or promise made by each party in a contract referred to
as? - ✔✔Consideration
✔✔What is an additional requirement for contracts for the sale of real estate? -
✔✔Written form
✔✔What legal instrument must be in place for personal representatives and trustees to
act on behalf of a principal? - ✔✔Power of attorney
✔✔In a contract for the sale and purchase of real estate, what depicts the seller's
consideration? - ✔✔The property to be given up
✔✔What can the net operating income of a property be viewed as in analogy to the
stock market? - ✔✔Annual dividend expected to be produced by the property
✔✔Which ratio shows investors the percentage of their initial equity investment
expected to be returned in cash during the next 12 months? - ✔✔Cash-on-cash return
✔✔What is an example of a profitability ratio in commercial real estate investment? -
✔✔Cash-on-cash return
✔✔What group of metrics provides a quick assessment of whether a property appears
to be priced reasonably relative to its income? - ✔✔Income multipliers
, ✔✔How does the cash-on-cash return handle the effect of mortgage financing? -
✔✔Subtracts the effects of mortgage financing from both the numerator and the
denominator
✔✔What does the 'above-line' treatment of capital expenditures imply in calculating
NOI? - ✔✔Capital expenditures are included in the calculation of NOI
✔✔What is the term for how cash flows generated by a property are distributed to
various investor classes? - ✔✔Waterfall
✔✔What is the typical range for an investor's targeted operating expense ratio by
property type? - ✔✔25-50%
✔✔What is a limitation associated with calculating returns, ratios, and multipliers in
single-asset real estate investment decisions? - ✔✔They fail to incorporate cash flows
beyond the first year of the analysis
✔✔What is the maximum federal income tax rate on individuals as of 2022? - ✔✔37%
✔✔How do capital expenditures differ from operating expenses? - ✔✔They add to the
market value of the property
✔✔In some commercial property operating agreements, what are investors scheduled
to receive? - ✔✔Their 'pro rata' share of all cash flow distributions
✔✔What proportion of all future cash flows is an investor entitled to if they contributed
1/10 of the required equity investment? - ✔✔10.0%
✔✔How does BTCF differ from NOI in terms of financial leverage? - ✔✔BTCF is a
levered cash flow, while NOI is an unlevered cash flow.
✔✔Which ratio measures the overall income-producing ability of a property? -
✔✔Capitalization rate.
✔✔What percentage of the acquisition price do commercial mortgage lenders generally
require the senior mortgage not to exceed? - ✔✔65 to 75%.
✔✔Which property type is expected to have the lowest relative going-in capitalization
rate? - ✔✔Apartment.
✔✔Which class of properties is expected to have the lowest cap rates on average? -
✔✔First tier properties.
