TEXAS REAL ESTATE FINANCE FINAL REVIEW
SHEET 2026 QUESTIONS AND VERIFIED
SOLUTIONS GUARANTEED TO PASS
◉ The cost recovery period for land improvements is how long?
A) 15 years
B) 25 years
C) 27.5 years
D) 30 years. Answer: A) 15 years
◉ Which of these statements is TRUE about financing large apartment
complexes?
A) Loan terms are not longer than 20 years.
B) When determining a loan amount, lenders ignore debt service as a
criterion.
C) As the size of the building increases, the loan ratio is generally
reduced.
D) Loan fees for large buildings are usually lower than for single-family
residences.. Answer: C) As the size of the building increases, the loan
ratio is generally reduced.
◉ Which statement about syndication is FALSE?
,A) Most investors belonging to syndicates invest a lot of their own
money.
B) Syndication offers small investors the opportunity to invest in real
estate ventures that would otherwise be outside their financial means.
C) A typical real estate syndicate combines the money of individual
investors with the management of a sponsor.
D) A syndicate is able to acquire real estate that could not be purchased
by an individual alone.. Answer: A) Most investors belonging to
syndicates invest a lot of their own money.
◉ What is a disadvantage of a graduated-payment loan?
A) The borrower has no control over the payment increases.
B) This plan could result in negative amortization.
C) Graduated payment loans cannot be refinanced.
D) A borrower cannot sell the property until the loan is converted..
Answer: B) This plan could result in negative amortization.
◉ Al purchases a factory as an investment. He installs sprinklers in the
building. What risk control technique is he practicing?
A) Avoiding
B) Limiting
C) Reducing
D) Accepting. Answer: C) Reducing
, ◉ Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount
points. What will the effective interest rate be?
A) 0.0665
B) 0.0675
C) 0.06875
D) 0.0695. Answer: C) 0.06875
◉ Investor Pete specializes in obtaining properties from investors in
financial difficulty. What investment strategy does Pete practice?
A) Arbitrage
B) Special situation
C) Opportunistic
D) Development. Answer: C) Opportunistic
◉ What is the term used to describe a loan that is not government-
backed?
A) Standard
B) Conventional
C) Normal
D) Junior. Answer: B) Conventional
SHEET 2026 QUESTIONS AND VERIFIED
SOLUTIONS GUARANTEED TO PASS
◉ The cost recovery period for land improvements is how long?
A) 15 years
B) 25 years
C) 27.5 years
D) 30 years. Answer: A) 15 years
◉ Which of these statements is TRUE about financing large apartment
complexes?
A) Loan terms are not longer than 20 years.
B) When determining a loan amount, lenders ignore debt service as a
criterion.
C) As the size of the building increases, the loan ratio is generally
reduced.
D) Loan fees for large buildings are usually lower than for single-family
residences.. Answer: C) As the size of the building increases, the loan
ratio is generally reduced.
◉ Which statement about syndication is FALSE?
,A) Most investors belonging to syndicates invest a lot of their own
money.
B) Syndication offers small investors the opportunity to invest in real
estate ventures that would otherwise be outside their financial means.
C) A typical real estate syndicate combines the money of individual
investors with the management of a sponsor.
D) A syndicate is able to acquire real estate that could not be purchased
by an individual alone.. Answer: A) Most investors belonging to
syndicates invest a lot of their own money.
◉ What is a disadvantage of a graduated-payment loan?
A) The borrower has no control over the payment increases.
B) This plan could result in negative amortization.
C) Graduated payment loans cannot be refinanced.
D) A borrower cannot sell the property until the loan is converted..
Answer: B) This plan could result in negative amortization.
◉ Al purchases a factory as an investment. He installs sprinklers in the
building. What risk control technique is he practicing?
A) Avoiding
B) Limiting
C) Reducing
D) Accepting. Answer: C) Reducing
, ◉ Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount
points. What will the effective interest rate be?
A) 0.0665
B) 0.0675
C) 0.06875
D) 0.0695. Answer: C) 0.06875
◉ Investor Pete specializes in obtaining properties from investors in
financial difficulty. What investment strategy does Pete practice?
A) Arbitrage
B) Special situation
C) Opportunistic
D) Development. Answer: C) Opportunistic
◉ What is the term used to describe a loan that is not government-
backed?
A) Standard
B) Conventional
C) Normal
D) Junior. Answer: B) Conventional
