Real Estate Finance Exam questions
with complete solutions
FDIC - correct answer ✔✔What other banking-related entity shares similarities with the
purpose and function of the NCUA?
Gross rent multiplier is sales price divided by monthly gross rent
GRM = sales price / monthly gross rent - correct answer ✔✔How is gross rent multiplier
calculated?
The gross income multiplier can be used to roughly determine whether the asking price of a
property is a good deal. Multiplying the GIM by the property's gross annual income yields the
property's value, or what it should be selling for.
GIM = sale price / gross annual rental income - correct answer ✔✔How is gross income
multiplier calculated?
Properties with five or more units use gross income multiplier. - correct answer ✔✔When is
gross income multiplier calculated?
Remember, rent has four letters. Gross rent multiplier is used for income-producing properties
with four or fewer units. - correct answer ✔✔When is gross rent multipler calculated?
Apartment building with 50 units - correct answer ✔✔For which of these properties would
gross income multiplier be calculated?
, 100x
Gross rent multiplier is sales price divided by monthly gross rent ($600,000 / $6,000 = 100).
Improperly calculating GRM could lead an investor to purchase a property that turns out to be a
poor investment. - correct answer ✔✔A three-unit income-producing property has a sale price
of $600,000. Monthly gross rent is estimated at $6,000. What's the gross rent multiplier?
Adjustable Rate Mortgage - correct answer ✔✔What does ARM stand for?
Title II, Section 203(n)
The FHA has a program specifically for the purchase of a unit in a cooperative housing project:
Title II Section 203(n). - correct answer ✔✔Dana and Phil have evaluated their situation, and
have decided to purchase a unit in a cooperative housing project. Which FHA loan program
might work for them?
The property is sold at auction and lien holders are paid from the proceeds of the sale.
The lien holders are paid from the proceeds of the foreclosure sale. If the sale doesn't net
enough to repay all lien holders, they're repaid in order of priority. Some junior lien holders may
not get anything. - correct answer ✔✔How are creditors or lien holders paid during a
foreclosure process?
Unruh Civil Rights Act
The Unruh Civil Rights Act requires all businesses to provide full and equal service to customers
and clients. Adam can't legally refuse to serve Brad and Zeke simply based on his disagreement
with their decision to marry. - correct answer ✔✔Adam is a real estate licensee. He gets a call
from Brad, who tells him that he's getting married soon, and that he and his partner, Zeke, will
need to buy a home that is between their places of work. The area where Adam has active
listings is right where Brad and Zeke need to be. Adam doesn't agree that gay marriage should
be legal, so he tells Brad that he doesn't have time to help but that he can refer Brad and Zeke
to another agent. What California legislation makes Adam's action illegal?
with complete solutions
FDIC - correct answer ✔✔What other banking-related entity shares similarities with the
purpose and function of the NCUA?
Gross rent multiplier is sales price divided by monthly gross rent
GRM = sales price / monthly gross rent - correct answer ✔✔How is gross rent multiplier
calculated?
The gross income multiplier can be used to roughly determine whether the asking price of a
property is a good deal. Multiplying the GIM by the property's gross annual income yields the
property's value, or what it should be selling for.
GIM = sale price / gross annual rental income - correct answer ✔✔How is gross income
multiplier calculated?
Properties with five or more units use gross income multiplier. - correct answer ✔✔When is
gross income multiplier calculated?
Remember, rent has four letters. Gross rent multiplier is used for income-producing properties
with four or fewer units. - correct answer ✔✔When is gross rent multipler calculated?
Apartment building with 50 units - correct answer ✔✔For which of these properties would
gross income multiplier be calculated?
, 100x
Gross rent multiplier is sales price divided by monthly gross rent ($600,000 / $6,000 = 100).
Improperly calculating GRM could lead an investor to purchase a property that turns out to be a
poor investment. - correct answer ✔✔A three-unit income-producing property has a sale price
of $600,000. Monthly gross rent is estimated at $6,000. What's the gross rent multiplier?
Adjustable Rate Mortgage - correct answer ✔✔What does ARM stand for?
Title II, Section 203(n)
The FHA has a program specifically for the purchase of a unit in a cooperative housing project:
Title II Section 203(n). - correct answer ✔✔Dana and Phil have evaluated their situation, and
have decided to purchase a unit in a cooperative housing project. Which FHA loan program
might work for them?
The property is sold at auction and lien holders are paid from the proceeds of the sale.
The lien holders are paid from the proceeds of the foreclosure sale. If the sale doesn't net
enough to repay all lien holders, they're repaid in order of priority. Some junior lien holders may
not get anything. - correct answer ✔✔How are creditors or lien holders paid during a
foreclosure process?
Unruh Civil Rights Act
The Unruh Civil Rights Act requires all businesses to provide full and equal service to customers
and clients. Adam can't legally refuse to serve Brad and Zeke simply based on his disagreement
with their decision to marry. - correct answer ✔✔Adam is a real estate licensee. He gets a call
from Brad, who tells him that he's getting married soon, and that he and his partner, Zeke, will
need to buy a home that is between their places of work. The area where Adam has active
listings is right where Brad and Zeke need to be. Adam doesn't agree that gay marriage should
be legal, so he tells Brad that he doesn't have time to help but that he can refer Brad and Zeke
to another agent. What California legislation makes Adam's action illegal?
