Real Estate Exam Chapter 15a, Questions with answers, rated A+

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Real Estate Exam Chapter 15a, Questions with answers, rated A+ A commercial apartment building consists of how many units...? - ✔✔5 or more units A high-rise office building consists of ... how many stories...? - ✔✔More than 20 stories A low-rise office building consists of how many stories...? - ✔✔1-3 stories A profit on an investment over a period of time, expressed as a proportion of the original investment is also known as...? - ✔✔Rate of Return A residential property owner, as opposed to a commercial owner, is typically NOT concerned with what...? - ✔✔Cash flow of the property A thorough review of a commercial investment property's financials are conducted during this process...? - ✔✔Due diligence Abby purchased a commercial property using all cash at a 11% capitalization rate. What is Abby's cash-on-cash return on the deal...? - ✔✔11 (Percent %) According to the 'Time value of money' concept, $1 today is worth what, as compared to $1 in the future...? - ✔✔Worth more Adam is a commercial real estate investor. He almost always uses 'other people's money' to fund his deals. In doing so, Adam is using what...? - ✔✔Leverage Anthony bought a commercial property using all cash at a 8.5% capitalization rate. What is Anthony's cash-on-cash return for the deal, after year 1...? - ✔✔8.5 (Percent %) As a commercial real estate owner, what should be your primary focus...? - ✔✔The risk involved in the deal Brian would like to buy a larger commercial building. How can this be accomplished using less cash out of pocket by Brian...? - ✔✔Brian should use leverage by obtaining seller financing David bought a building at a 7% cap rate. What will the interest rate on his mortgage have to be in order to experience positive leverage...? - ✔✔Less than 7% David works in a newly built, high-rise office building. David most likely works in what Class of building...? - ✔✔Class A Due diligence is critical to understanding what of a commercial investment property...? - ✔✔The true value of the property Ely recently purchased a commercial investment property using a jumbo loan from the bank. Ely's use of bank financing is an example of what...? - ✔✔Leverage Eric works in a 20 year-old building that lacks some of the amenities found in newer office buildings. Eric most likely works in this Class of building...? - ✔✔Class B GAAP is an acronym for what...? - ✔✔Generally Accepted Accounting Principles How is a multi-family property valued different than an office building...? - ✔✔Both property types are valued the same way Howard wants to buy a commercial building but does not have enough cash. He decides to bring in partners to help fund the equity and provide them with a return on their money. Howard's decision to use partners is an example of what...? - ✔✔Leverage If a residential building consists of 5 dwelling units, what will the building be considered...? - ✔✔Commercial If an owner has enough cash to fund the operations of a commercial investment property while the cash flow becomes stabilized, he is considered this...? - ✔✔Liquid If an owner spends all of his/her cash on a down payment of an investment property, and does not have any additional cash during the operations of the property, he/she is considered what...? - ✔✔Illiquid If the cap rate on a building is 4% and the interest rate on the mortgage is 5.5%, what will the owner experience...? - ✔✔Negative Leverage If the cap rate on a building is 7% and the interest rate on the mortgage is 5%, what will the owner experience...? - ✔✔Positive Leverage If the capitalization rate of a property is 7%, and an investor purchases the property using all cash, what is the cash-on-cash return for the investor...? - ✔✔7 (Percent %) If the capitalization rate on a property is 12%, and the buyer purchases the property using all cash, what is the cash-on-cash return for the buyer...? - ✔✔12 (Percent %) If the cash flow of a building cannot cover the cost of upkeep, the owner must have what, to maintain the building...? - ✔✔Liquidity James created a real estate syndication to purchase a multi-family building. He offered to pay his investors an 8% return first, after which he will split the remaining profits 50/50. What is the 8% return referred to...? - ✔✔Preferred Return James purchased a commercial property at a 7.5% cap [Show More]

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