REE 4103 FINAL EXAM QUESTIONS & ANSWERS
Rental Data would not include: - Answer -Reproduction costs**
All of the following relate to the rent level or payment schedule of a lease except: -
Answer -Financing of the Property***
All the following are excluded from the reconstructed operating statement except: -
Answer -• Excluded
o Mortgage loan interest payments, book depreciation, business tax, capital
costs/improvements• Included
o Management charges
o fixed-taxes & insurance
o variable: management, utilities, maintenance
o replacement allowance**
When the landlord permits the tenant occupancy and use of the space each year for a
fixed amount of money, the lease is described as - Answer -Fixed lease**
Which approach would probably be given the most weight in appraising a large office
building? - Answer -Income approach**
Which principle of value best affirms that value is the present worth of expected future
benefits? - Answer -Anticipation**
The appraisal approach that normally would be most useful in valuing investment
property is the: - Answer -Income approach**
Value is said to be the present worth of future benefits. This defines the principle of -
Answer -Net Present Value**
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3:
$14,000 Year 4: $16,000; would be called what type of lease? - Answer -Step-up
lease**
The lump-sum benefit an investor receives upon termination of an investment is called -
Answer -Reversion***
An allowance for vacancy and collection loss is estimated as a percentage of - Answer
-Potential Gross Income*
The anticipated income that remains after deducting all operating expenses from
effective gross income but before mortgage debt service is - Answer -Net Operating
Income*
, A _______________ would have the lowest ratio of operating expenses to gross
income incurred by the landlord - Answer -Retail and Industrial properties*
The operating expense ratio for income property is typically - Answer -complement of
the Net Income Ratio*
In determining income and expenses the first step is - Answer -a lease and rent
analysis*
Effective gross income is income after an allowance for - Answer -vacancy rates.*
In a high rise 100-unit apartment building there is a basement laundry area that brings
in $100 monthly from the concessionaire. The laundry income is - Answer -Would
commonly be included as a miscellaneous income and added to the potential gross
income.**
In an appraisal of income property, which of the following items should be excluded
from the expense statement? - Answer -Depreciation***
Overage rent is - Answer -Percentage rent paid over and above the guaranteed
minimum rent or base rent; calculated as a percentage of sales in excess of a specified
breakpoint sales volume***
A small office building sold for $120,000. The monthly net operating income is $1,300
per MONTH. What was the overall capitalization rate? - Answer -V = I / R
V = 120,000
NOI = 1,300 * 12 = 15,600
V = I / R so
R = NOI / V ****
Painting and redecorating of an apartment unit is a(n): - Answer -operating expense***
A reconstructed operating statement for an owner operated property should include -
Answer -Vacancy and collection loss: EGI, operating expenses, fixed expenses,
variable expenses, replacement allowance, total operating expenses, NOI, additional
calculation, expense and income ratios**
Management Expense**??
Which of the following is an example of a specific expense item rather than a category?
- Answer -property taxes**
A rent survey reveals that apartment buildings offering one-bedroom units have a
considerably higher occupancy factor than those with two-bedroom units. If the subject
property includes only units with two bedrooms, the appraisal should probably project -
Answer -a higher vacancy factor than was found for 1 bedroom units**
Rental Data would not include: - Answer -Reproduction costs**
All of the following relate to the rent level or payment schedule of a lease except: -
Answer -Financing of the Property***
All the following are excluded from the reconstructed operating statement except: -
Answer -• Excluded
o Mortgage loan interest payments, book depreciation, business tax, capital
costs/improvements• Included
o Management charges
o fixed-taxes & insurance
o variable: management, utilities, maintenance
o replacement allowance**
When the landlord permits the tenant occupancy and use of the space each year for a
fixed amount of money, the lease is described as - Answer -Fixed lease**
Which approach would probably be given the most weight in appraising a large office
building? - Answer -Income approach**
Which principle of value best affirms that value is the present worth of expected future
benefits? - Answer -Anticipation**
The appraisal approach that normally would be most useful in valuing investment
property is the: - Answer -Income approach**
Value is said to be the present worth of future benefits. This defines the principle of -
Answer -Net Present Value**
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3:
$14,000 Year 4: $16,000; would be called what type of lease? - Answer -Step-up
lease**
The lump-sum benefit an investor receives upon termination of an investment is called -
Answer -Reversion***
An allowance for vacancy and collection loss is estimated as a percentage of - Answer
-Potential Gross Income*
The anticipated income that remains after deducting all operating expenses from
effective gross income but before mortgage debt service is - Answer -Net Operating
Income*
, A _______________ would have the lowest ratio of operating expenses to gross
income incurred by the landlord - Answer -Retail and Industrial properties*
The operating expense ratio for income property is typically - Answer -complement of
the Net Income Ratio*
In determining income and expenses the first step is - Answer -a lease and rent
analysis*
Effective gross income is income after an allowance for - Answer -vacancy rates.*
In a high rise 100-unit apartment building there is a basement laundry area that brings
in $100 monthly from the concessionaire. The laundry income is - Answer -Would
commonly be included as a miscellaneous income and added to the potential gross
income.**
In an appraisal of income property, which of the following items should be excluded
from the expense statement? - Answer -Depreciation***
Overage rent is - Answer -Percentage rent paid over and above the guaranteed
minimum rent or base rent; calculated as a percentage of sales in excess of a specified
breakpoint sales volume***
A small office building sold for $120,000. The monthly net operating income is $1,300
per MONTH. What was the overall capitalization rate? - Answer -V = I / R
V = 120,000
NOI = 1,300 * 12 = 15,600
V = I / R so
R = NOI / V ****
Painting and redecorating of an apartment unit is a(n): - Answer -operating expense***
A reconstructed operating statement for an owner operated property should include -
Answer -Vacancy and collection loss: EGI, operating expenses, fixed expenses,
variable expenses, replacement allowance, total operating expenses, NOI, additional
calculation, expense and income ratios**
Management Expense**??
Which of the following is an example of a specific expense item rather than a category?
- Answer -property taxes**
A rent survey reveals that apartment buildings offering one-bedroom units have a
considerably higher occupancy factor than those with two-bedroom units. If the subject
property includes only units with two bedrooms, the appraisal should probably project -
Answer -a higher vacancy factor than was found for 1 bedroom units**
