Ch 5 Real Estate U
30 hr Exam
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
, Which type of risk can investors minimize by taking out only fixed-rate property loans or variable rate
loans with limits or caps? - Answer: Interest rate risk.
In commercial real estate, which of the following represents a strong market? - Answer: High demand
from tenants.
Which of the following phrases refers to the total rent and revenue produced by an investment property
but does not consider operating expenses or tax payments? - Answer: Effective gross income.
Based on the Internal Revenue Service (IRS) depreciation tables, what is the time that an investor should
take to depreciate a commercial building? - Answer: 39 years.
What happens at the end of the installment term, after the buyer has made all payments? - Answer:
The seller records a deed to transfer legal title to the buyer.
Which of these is a potential risk buyers should know about before signing an Installment Land
Contract? - Answer: Buyers typically do not have the foreclosure protection available when the property
is financed using a mortgage or deed of trust.
What type of ownership interest does an option to purchase real estate give the option holder? -
Answer: An equitable interest.
Why might an investor want to enter into an option to purchase real estate? - Answer: The investor
thinks the market will go up, and they can lock in a lower price
How does an option holder exercise their rights under an options contract? - Answer: By notifying the
property owner of their intention to exercise their rights under the contract.
What is one important difference between preemptive rights and options to purchase real estate? -
Answer: An option to purchase real estate gives the holder an equitable interest in the property.
What happens if a right of first refusal is triggered by the owner receiving another offer, but the holder
does not exercise the right before the time period to do so expires? - Answer: The holder of the right
30 hr Exam
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
, Which type of risk can investors minimize by taking out only fixed-rate property loans or variable rate
loans with limits or caps? - Answer: Interest rate risk.
In commercial real estate, which of the following represents a strong market? - Answer: High demand
from tenants.
Which of the following phrases refers to the total rent and revenue produced by an investment property
but does not consider operating expenses or tax payments? - Answer: Effective gross income.
Based on the Internal Revenue Service (IRS) depreciation tables, what is the time that an investor should
take to depreciate a commercial building? - Answer: 39 years.
What happens at the end of the installment term, after the buyer has made all payments? - Answer:
The seller records a deed to transfer legal title to the buyer.
Which of these is a potential risk buyers should know about before signing an Installment Land
Contract? - Answer: Buyers typically do not have the foreclosure protection available when the property
is financed using a mortgage or deed of trust.
What type of ownership interest does an option to purchase real estate give the option holder? -
Answer: An equitable interest.
Why might an investor want to enter into an option to purchase real estate? - Answer: The investor
thinks the market will go up, and they can lock in a lower price
How does an option holder exercise their rights under an options contract? - Answer: By notifying the
property owner of their intention to exercise their rights under the contract.
What is one important difference between preemptive rights and options to purchase real estate? -
Answer: An option to purchase real estate gives the holder an equitable interest in the property.
What happens if a right of first refusal is triggered by the owner receiving another offer, but the holder
does not exercise the right before the time period to do so expires? - Answer: The holder of the right
