Certified General Exam with Complete
Solutions
A 50-unit apartment complex is being appraised. The appraiser is calculating the
appropriate annual replacement reserve allowance. Several items are new, but were
determined to have useful lives shorter than the physical structure: the appliances are
$750 per unit, the roofs are $200,000, and, the clubhouse furniture is
$11,000. The appraiser believes management can earn a safe rate of 4.5% on their
reserve funds.
What average annual reserve per unit must be allocated in order to take care of the
short-lived items, assuming they must be replaced every seven years have no salvage
value? - ANSWER-$620
A 50-unit apartment complex is being appraised. The appraiser is calculating the
appropriate annual replacement reserve allowance. Several items are new, but were
determined to have useful lives shorter than the physical structure: the appliances are
$750 per unit, the roofs are $200,000, and, the clubhouse furniture is $11,000. The
appraiser believes management can earn a safe rate of 4.5% on their reserve funds.
What average annual reserve per unit must be allocated in order to take care of the
short-lived items, assuming they must be replaced every seven years and have no
salvage value?
A. $620
B. $560
C. $770
D. $710 - ANSWER-A. $620
A 50,000 sf site is improved with a 10,000 sf industrial building in average
condition. Market values for the area indicate:
$12.00 per sf for unimproved sites
$45 per sf for an industrial building in average condition
$50 per sf industrial buildings in good condition
$60 per sf for retail warehouse buildings
Demolition and removal costs for similar structures are $2.50 per sf of building area
Renovation costs to improve the building to good condition are $5.00 per sf of building
area Costs to convert industrial buildings to retail warehouses are $17.50 per sf of
building area
What is the most probable highest and best use of the property as improved? -
ANSWER-Demolition of existing improvements and redevelopment of the site
A client asked for a feasibility analysis based on equity return rates. One use provides
an annual net operating income totaling $75k. There will be a 7%, $800,000, 30 yr
, mortgage paid monthly. The client must make a $250k down payment and will hold the
property for a 20-yr period. The client expects to sell the property for $458,400.
What is the annual equity dividend rate? - ANSWER-4.45%
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retail, or apartments.
The land is under contract for purchase for $3.35 million and the minimum
acceptable land capitalization rate is 6.0%. Building capitalization rates are
currently 10%. Which of the above uses are financially feasible?
Maximum
Density Costs Financial Data
Mini-storage 0.60 FAR $66 per sf NOI $1,051,000
hard and soft
Rental 0.40 FAR $108 per sf EGI $24 per sf
hard and soft Expense ratio: 45% of EGI
Office 0.540 FAR $120 per sf Gross Rent: $25 per sf
hard and soft Market occupancy: 92%
Expense ratio: 45% of EGI
Multiunit
15 UPA $108,000 per unit
Monthly Rent: $2,400 per
unit
hard and soft Market occupancy: 95%
Expense ratio: 45% of EGI - ANSWER-Multi-unit and retail
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retail, or apartments.
Given these factors, if the building capitalization rate is 10% and the land capitalization
rate is 7.5%, what is market value per sf of the site under the highest and best use?
Maximum Density Costs Financial Data:
Mini-storage 0.60 FAR $66 per sf NOI $1,051,000
hard and soft
Rental 0.40 FAR $108 per sf EGI $24 per sf hard and soft Expense ratio: 45% of EGI
Office 0.540 FAR $120 per sf Gross Rent: $25 per sf hard and soft Market occupancy:
92%
Expense ratio: 45% of EGI
Multiunit 15 UPA $108,000 per unit Monthly Rent: $2,400 per unit hard and soft Market
occupancy: 95% Expense ratio: 45% of EGI - ANSWER-$19.50 per sf
A fee appraiser seeks to get on the approved list for a local mortgage company. In order
to be considered for approval, the lender requires appraisers to provide sample
Solutions
A 50-unit apartment complex is being appraised. The appraiser is calculating the
appropriate annual replacement reserve allowance. Several items are new, but were
determined to have useful lives shorter than the physical structure: the appliances are
$750 per unit, the roofs are $200,000, and, the clubhouse furniture is
$11,000. The appraiser believes management can earn a safe rate of 4.5% on their
reserve funds.
What average annual reserve per unit must be allocated in order to take care of the
short-lived items, assuming they must be replaced every seven years have no salvage
value? - ANSWER-$620
A 50-unit apartment complex is being appraised. The appraiser is calculating the
appropriate annual replacement reserve allowance. Several items are new, but were
determined to have useful lives shorter than the physical structure: the appliances are
$750 per unit, the roofs are $200,000, and, the clubhouse furniture is $11,000. The
appraiser believes management can earn a safe rate of 4.5% on their reserve funds.
What average annual reserve per unit must be allocated in order to take care of the
short-lived items, assuming they must be replaced every seven years and have no
salvage value?
A. $620
B. $560
C. $770
D. $710 - ANSWER-A. $620
A 50,000 sf site is improved with a 10,000 sf industrial building in average
condition. Market values for the area indicate:
$12.00 per sf for unimproved sites
$45 per sf for an industrial building in average condition
$50 per sf industrial buildings in good condition
$60 per sf for retail warehouse buildings
Demolition and removal costs for similar structures are $2.50 per sf of building area
Renovation costs to improve the building to good condition are $5.00 per sf of building
area Costs to convert industrial buildings to retail warehouses are $17.50 per sf of
building area
What is the most probable highest and best use of the property as improved? -
ANSWER-Demolition of existing improvements and redevelopment of the site
A client asked for a feasibility analysis based on equity return rates. One use provides
an annual net operating income totaling $75k. There will be a 7%, $800,000, 30 yr
, mortgage paid monthly. The client must make a $250k down payment and will hold the
property for a 20-yr period. The client expects to sell the property for $458,400.
What is the annual equity dividend rate? - ANSWER-4.45%
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retail, or apartments.
The land is under contract for purchase for $3.35 million and the minimum
acceptable land capitalization rate is 6.0%. Building capitalization rates are
currently 10%. Which of the above uses are financially feasible?
Maximum
Density Costs Financial Data
Mini-storage 0.60 FAR $66 per sf NOI $1,051,000
hard and soft
Rental 0.40 FAR $108 per sf EGI $24 per sf
hard and soft Expense ratio: 45% of EGI
Office 0.540 FAR $120 per sf Gross Rent: $25 per sf
hard and soft Market occupancy: 92%
Expense ratio: 45% of EGI
Multiunit
15 UPA $108,000 per unit
Monthly Rent: $2,400 per
unit
hard and soft Market occupancy: 95%
Expense ratio: 45% of EGI - ANSWER-Multi-unit and retail
A developer has a rectangular 5-acre site with a commercial zoning designation
allowing mini-storage, office, retail, or apartments.
Given these factors, if the building capitalization rate is 10% and the land capitalization
rate is 7.5%, what is market value per sf of the site under the highest and best use?
Maximum Density Costs Financial Data:
Mini-storage 0.60 FAR $66 per sf NOI $1,051,000
hard and soft
Rental 0.40 FAR $108 per sf EGI $24 per sf hard and soft Expense ratio: 45% of EGI
Office 0.540 FAR $120 per sf Gross Rent: $25 per sf hard and soft Market occupancy:
92%
Expense ratio: 45% of EGI
Multiunit 15 UPA $108,000 per unit Monthly Rent: $2,400 per unit hard and soft Market
occupancy: 95% Expense ratio: 45% of EGI - ANSWER-$19.50 per sf
A fee appraiser seeks to get on the approved list for a local mortgage company. In order
to be considered for approval, the lender requires appraisers to provide sample
