Summary Exam 1
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
,Kevin is preparing a Comparative Market Analysis (CMA) on a commercial net leased office property that
has 100% occupancy and income of $67,000, with expenses of $22,000 and a management fee of 5% of
the gross income. The property is assessed by the municipality at $425,000. If Kevin considers a 9% rate
of return to be reasonable for this income property, what would Kevin recommend as a listing price?
1. $500,000
2. $597,000
3. $744,444
4. $462,778 - Answer: 4. $462,778
- $67,000 - $22,000 - $3,350 (5% management fee) = $41, = $462,778
NOI (effective gross income - operating expenses) /cap rate = sales price $41,650/ .09 = $462,778
Scenario A
John and Mary Apton list their home for $152,000. There is an appurtenant easement to access a large
lake which is deeded.
A coal fired power plant is slated to open 5 miles from the property next year. An Environmental Impact
Statement is due on March 7.
Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest
rate due and payable in 10 years. It is accepted. The offer is contingent on the environmental impact
results.
Closing is scheduled for June 1. Taxes are $3040, the commission is 6.5%, (buyer's agent commission is
2.8%), taxes and insurance are $675, recording fee is $25
The environmental impact statement showed the value of the property would not be impacted. Use a
banker's calendar. Seller is responsible for the day of closing.
With the information given in the scenario, what costs will the buyer need to bring to closing?
1. $700 ($675, $25)
, 2. $3 - Answer: 1. $700 ($675, $25)
- $700 ($675, $25). The buyer does not pay any taxes until next year and does not pay the agent's
commission.
A conditional use permit would MOST LIKELY pertain to ______ .
1. Deed Restrictions
2. Zoning
3. Building codes
4. Covenants - Answer: 2. Zoning
- Conditional use permit (also known as a special use permit) usually granted to a property owner to
allow a special use of property that is defined as a non-allowable use within that zone.
A property valued at $72,000 has an assessed value of 50%. If the mill rate is 6 mills, what is the tax?
1. $216
2. $2,160
3. $1,800
4. $18,000 - Answer: 1. $216
- $72,000 x 0.5 =$36,000 x 0.006 = $216
Subdivision laws come from ______ .
1. U.S. Constitution
2. The planning committee
3. Federal laws and regulations
4. State law and municipal ordinances - Answer: 4. State law and municipal ordinances
A major disadvantage of owning investment property might be ________ .
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
,Kevin is preparing a Comparative Market Analysis (CMA) on a commercial net leased office property that
has 100% occupancy and income of $67,000, with expenses of $22,000 and a management fee of 5% of
the gross income. The property is assessed by the municipality at $425,000. If Kevin considers a 9% rate
of return to be reasonable for this income property, what would Kevin recommend as a listing price?
1. $500,000
2. $597,000
3. $744,444
4. $462,778 - Answer: 4. $462,778
- $67,000 - $22,000 - $3,350 (5% management fee) = $41, = $462,778
NOI (effective gross income - operating expenses) /cap rate = sales price $41,650/ .09 = $462,778
Scenario A
John and Mary Apton list their home for $152,000. There is an appurtenant easement to access a large
lake which is deeded.
A coal fired power plant is slated to open 5 miles from the property next year. An Environmental Impact
Statement is due on March 7.
Agent Pacheco presents an offer to the Aptons. It is a land contract for $142,000 with an 8% interest
rate due and payable in 10 years. It is accepted. The offer is contingent on the environmental impact
results.
Closing is scheduled for June 1. Taxes are $3040, the commission is 6.5%, (buyer's agent commission is
2.8%), taxes and insurance are $675, recording fee is $25
The environmental impact statement showed the value of the property would not be impacted. Use a
banker's calendar. Seller is responsible for the day of closing.
With the information given in the scenario, what costs will the buyer need to bring to closing?
1. $700 ($675, $25)
, 2. $3 - Answer: 1. $700 ($675, $25)
- $700 ($675, $25). The buyer does not pay any taxes until next year and does not pay the agent's
commission.
A conditional use permit would MOST LIKELY pertain to ______ .
1. Deed Restrictions
2. Zoning
3. Building codes
4. Covenants - Answer: 2. Zoning
- Conditional use permit (also known as a special use permit) usually granted to a property owner to
allow a special use of property that is defined as a non-allowable use within that zone.
A property valued at $72,000 has an assessed value of 50%. If the mill rate is 6 mills, what is the tax?
1. $216
2. $2,160
3. $1,800
4. $18,000 - Answer: 1. $216
- $72,000 x 0.5 =$36,000 x 0.006 = $216
Subdivision laws come from ______ .
1. U.S. Constitution
2. The planning committee
3. Federal laws and regulations
4. State law and municipal ordinances - Answer: 4. State law and municipal ordinances
A major disadvantage of owning investment property might be ________ .
