Re 3381 Midterm 1 Exam Questions With Correct Verified Answers | 100% Pass (A+ Certified)

RE 3381 MIDTERM 1 EXAM QUESTIONS WITH CORRECT VERIFIED ANSWERS | 100% PASS (A+ CERTIFIED)The term real estate can be thought of in 4 different ways. What are they? Answer Tangible asset (physical), Intangible asset, Investment asset class, An industry The four-quadrant model of the benefits of investing in real estate Answer Cash Flow, Appreciation, Diversification, Tax Benefits Why invest in real estate formula Answer Cash flow today + Cash flow in the future + appreciation Why does real estate have value? Answer utility, scarcity, anticipation Define real estate user/space/property markets. Answer "The Physical World" -Locationally unique -where we are using the real estate -rents for physically similar spaces can vary widely across location and property types Define real estate capital/asset markets. Answer "The Financial World" -Re competes for funds in the capital market with other asset classes such as stocks and bonds -Investors select a mix of investments based on expected risks and returns What is the #1 key driver of real estate demand? Answer Location, locational economics and locational demographics What is real estate considered an inefficient asset class? Answer - It trades in private, largely unregulated markets -Capital intensive (largely indivisible and leveraged transactions) - Supply is durable and "lumpy" -Ability for parties to have asymmetric information - Location, location, location Understand the interaction of the real estate space and asset markets. Answer Space markets vs Asset markets lead to value (look at picture) When we say that real estate property rights are 3 dimensional, what do we mean? Answer Real property: Rights in land and its permanent structures 3 Dimensions 1. Surface of the earth and improvements 2. Air, up to reserved air space or tallest structure 3. Beneath the earth as far as technology allows: minerals, oil and gas, water Personal property: All other property - Personal and household goods - Business property Air Rights Answer Based in common law, but relevance changed with the advent of theskyscraper and airplane • Heights typically governed by building code and FAA flight paths If allowed by the jurisdiction, there can be tremendous value in theirexchange. Subsurface Mineral Rights Answer • Subsurface rights carry implied interest for removal • Mineral estates are considered to be dominant to the surface • Subject to remediation and damages to the surfaceowner Mineral rights can be divided/split • Grantor can divide mineral estates • Smaller interests • Leasehold interests • Royalty interests Dominant legal foundation Rule of Capture • Byproduct of the advent of the oil and gas industry • Subject to pooling/unitization laws in some states For property rights to have value, you have to assume that there is ___for them. Answer DEMAND What are the four key rights in the "bundle" of real property interests? Answer Disposition