©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM
UNIVERSITY OF NORTH TEXAS AT DALLAS
UGA REAL 4000 EXAM 4 QUESTIONS AND ASNWERS (100% PASS)
What is EQUITY and some examples? - Answer✔️✔️--OWNERSHIP
ex: sponsor equity, common equity
What is DEBT and some examples? - Answer✔️✔️--LOAN TO
OWNERSHIP
ex: junior debt, senior debt
Due to the large size of typical RE investments, investors almost
always..... - Answer✔️✔️-pool their equity capital
What are some ways to pool equity? - Answer✔️✔️--General
partnership
-Limited partnership
-C corporation
-S corporation
-Limited liability company (LLC)
-Tenancy-in-common
-REIT
What are the advantages of pooling equity? - Answer✔️✔️--allows
investors to purchase an interest in larger properties
1
, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM
UNIVERSITY OF NORTH TEXAS AT DALLAS
-diversification of portfolio
-economies of sale in acquisitions, management and disposition
-access to cheaper debt capital
-expertise of management team hired by syndicator/ organizer
What are disadvantages of pooling equity - Answer✔️✔️--often must
relinquish management control to active manager
-must compensate sponsor with fees, salary, and/or
disproportionate share of equity ownership
What drives Choice of Ownership Form? - Answer✔️✔️-1. Federal
income tax issues/rules
2. Desire of investors for limited liability
3. Management control issues
4. Ability to access debt & additional equity capital
5. Ability to share risk with other investors
6. Ability of investors to dispose of their interests
Direct Investment - Answer✔️✔️--gives the individual & institutional
investors complete control
-but...investor must supply the expertise
2
, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM
UNIVERSITY OF NORTH TEXAS AT DALLAS
-no liquidity
-as size of investor's portfolio increase, its easier to diversify risk,
create liquidity across assets, retain in-house experts or hire
consultants
What is the estimated market value of investable commercial real
estate? - Answer✔️✔️-12.6 trillion
General Partnership - Answer✔️✔️--treated as conduits for tax
purposes (don't face "double taxation")
-easily created
-partners make all operating decisions
- all partners have unlimited liability (which makes it uncommon)
Limited Partnership (LP) - Answer✔️✔️--must have at least one
general and one limited partner
-treated as conduits for tax purposes
-limited partners can cap their liability to their investment amount,
while general partners face unlimited liability
-rely on the general partner to make all decisions
C Corporation - Answer✔️✔️--most common type of corporation
3
UNIVERSITY OF NORTH TEXAS AT DALLAS
UGA REAL 4000 EXAM 4 QUESTIONS AND ASNWERS (100% PASS)
What is EQUITY and some examples? - Answer✔️✔️--OWNERSHIP
ex: sponsor equity, common equity
What is DEBT and some examples? - Answer✔️✔️--LOAN TO
OWNERSHIP
ex: junior debt, senior debt
Due to the large size of typical RE investments, investors almost
always..... - Answer✔️✔️-pool their equity capital
What are some ways to pool equity? - Answer✔️✔️--General
partnership
-Limited partnership
-C corporation
-S corporation
-Limited liability company (LLC)
-Tenancy-in-common
-REIT
What are the advantages of pooling equity? - Answer✔️✔️--allows
investors to purchase an interest in larger properties
1
, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM
UNIVERSITY OF NORTH TEXAS AT DALLAS
-diversification of portfolio
-economies of sale in acquisitions, management and disposition
-access to cheaper debt capital
-expertise of management team hired by syndicator/ organizer
What are disadvantages of pooling equity - Answer✔️✔️--often must
relinquish management control to active manager
-must compensate sponsor with fees, salary, and/or
disproportionate share of equity ownership
What drives Choice of Ownership Form? - Answer✔️✔️-1. Federal
income tax issues/rules
2. Desire of investors for limited liability
3. Management control issues
4. Ability to access debt & additional equity capital
5. Ability to share risk with other investors
6. Ability of investors to dispose of their interests
Direct Investment - Answer✔️✔️--gives the individual & institutional
investors complete control
-but...investor must supply the expertise
2
, ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM
UNIVERSITY OF NORTH TEXAS AT DALLAS
-no liquidity
-as size of investor's portfolio increase, its easier to diversify risk,
create liquidity across assets, retain in-house experts or hire
consultants
What is the estimated market value of investable commercial real
estate? - Answer✔️✔️-12.6 trillion
General Partnership - Answer✔️✔️--treated as conduits for tax
purposes (don't face "double taxation")
-easily created
-partners make all operating decisions
- all partners have unlimited liability (which makes it uncommon)
Limited Partnership (LP) - Answer✔️✔️--must have at least one
general and one limited partner
-treated as conduits for tax purposes
-limited partners can cap their liability to their investment amount,
while general partners face unlimited liability
-rely on the general partner to make all decisions
C Corporation - Answer✔️✔️--most common type of corporation
3
