Question 1

If vacancies and collection losses, property taxes, expenses of operation and loan service are deducted from the gross income, you have

Accepted Answer

A)  internal rate of return. 
B)  taxable income. 
C)  net spendable income. 
D)  net worth. 
A)  internal rate of return. 
B)  taxable income. 
C)  net spendable income. 
D)  net worth. C

Question 2

If a potential investment is referred to as an alligator or loss, the investor knows he can expect

Accepted Answer

A)  water problems. 
B)  a negative cash flow. 
C)  no profit. 
D)  a break even investment 
A)  water problems. 
B)  a negative cash flow. 
C)  no profit. 
D)  a break even investment B

Question 3

Choose the one most appropriate answer for each.
-a method of calculating depreciation that takes equal amounts of depreciation each year

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter S

Question 4

Choose the one most appropriate answer for each.
-a limited partner who does not materially participate on a "regular, substantial, and continuous basis"

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 5

Choose the one most appropriate answer for each.
-a disclosure statement that describes an investment opportunity

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 6

Which of the following age groups should be the most cautious in terms of investment risk taking?

Accepted Answer

A)  35-45 years 
B)  45-55 years 
C)  55-65 years 
D)  65+ years 
A)  35-45 years 
B)  45-55 years 
C)  55-65 years 
D)  65+ years

Question 7

Choose the one most appropriate answer for each.
-requires the investor to dip into her own pocket

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 8

A rental property produces $2,000 per month in rents and consumes $600 per month in operating expenses. The mortgage payment is $1,200 per month. For the investor, this property produces a

Accepted Answer

A)  positive cash flow. 
B) 	zero cash flow. 
C)  negative flow. 
D)  break even cash flow. 
A)  positive cash flow. 
B) 	zero cash flow. 
C)  negative flow. 
D)  break even cash flow.

Question 9

A property is purchased for $50,000 with a $45,000 loan. Several years later the loan has been reduced to $40,000 and the property is sold for $55,000. What is the seller's equity build-up at the time of sale?

Accepted Answer

A)  none 
B)  $5,000 
C)  $10,000 
D)  $15,000 
A)  none 
B)  $5,000 
C)  $10,000 
D)  $15,000

Question 10

Choose the one most appropriate answer for each.
-financing where the borrower is not personally liable

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 11

Choose the one most appropriate answer for each.
-increase in property value that the owner hopes will occur while owning it

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 12

Mortgage balance reduction is

Accepted Answer

A)  an out-of-pocket expense. 
B)  a deduction for tax purposes. 
C)  tax-exempted. 
D)  quite large at the beginning of the loan period. 
A)  an out-of-pocket expense. 
B)  a deduction for tax purposes. 
C)  tax-exempted. 
D)  quite large at the beginning of the loan period.

Question 13

Monetary benefits of investing in real estate come from

Accepted Answer

A)  cash flow. 
B)  tax shelter. 
C)  mortgage reduction. 
D)  all of the above. 
A)  cash flow. 
B)  tax shelter. 
C)  mortgage reduction. 
D)  all of the above.

Question 14

A four unit quadruplex has rental income of $500 per month per unit. Given a 5% vacancy rate, operating expenses of $700 per month, and mortgage payments of $1,500 per month, you can anticipate a monthly

Accepted Answer

A)  net spendable of $200. 
B)  net spendable of $300. 
C)  negative cash flow of $200. 
D)  negative cash flow of $300. 
A)  net spendable of $200. 
B)  net spendable of $300. 
C)  negative cash flow of $200. 
D)  negative cash flow of $300.

Question 15

The income tax savings that an investment can produce for its owner is called a tax ____________________.

Accepted Answer

The answer of The income tax savings that an investment...

Question 16

____________________ is the increase in property value that the owner hopes will occur while owning it.

Accepted Answer

The answer of ____________________ is the increase in property value...

Question 17

Choose the one most appropriate answer for each.
-any method of depreciation that achieves a faster rate of depreciation than the straight-line method

Accepted Answer

A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter 
A) accelerated depreciation 
B) active investor 
C) appreciation 
D) at-risk rules 
E) blind pool
F)cash flow
G)cash-on-cash
H)downside risk
I)equity build-up
J)GLITAMAD
K)investment strategy
L)leverage
M)master limited partnership
N)negative cash flow
O)negative leverage
P)non-recourse financing
Q)passive investor
R)prospectus
S)straight-line depreciation
T)tax shelter

Question 18

A negative cash flow may be offset by

Accepted Answer

A)  tax shelter. 
B)  appreciation. 
C)  both a and b. 
D)  neither a nor b. 
A)  tax shelter. 
B)  appreciation. 
C)  both a and b. 
D)  neither a nor b.

Question 19

A real estate agent buys a house and lot for $49,900. He spends $1,200 to remodel it. What price must he sell the property for to realize a 20% profit?

Accepted Answer

A)  $61,320 
B)  $58,440 
C)  $59,880 
D)  $42,583 
A)  $61,320 
B)  $58,440 
C)  $59,880 
D)  $42,583

Question 20

If an investor is seeking the greatest risk and the greatest return, when should he buy?

Accepted Answer

A)  Before construction 
B)  During construction 
C)  After construction 
D)  Upon occupancy by anchor tenants 
A)  Before construction 
B)  During construction 
C)  After construction 
D)  Upon occupancy by anchor tenants

Exam 26: Investing in Real Estate

If vacancies and collection losses, property taxes, expenses of operation and loan service are deducted from the gross income, you have

If a potential investment is referred to as an alligator or loss, the investor knows he can expect

Choose the one most appropriate answer for each. -a method of calculating depreciation that takes equal amounts of depreciation each year

Choose the one most appropriate answer for each. -a limited partner who does not materially participate on a "regular, substantial, and continuous basis"

Choose the one most appropriate answer for each. -a disclosure statement that describes an investment opportunity

Which of the following age groups should be the most cautious in terms of investment risk taking?

Choose the one most appropriate answer for each. -requires the investor to dip into her own pocket

A rental property produces $2,000 per month in rents and consumes $600 per month in operating expenses. The mortgage payment is $1,200 per month. For the investor, this property produces a

A property is purchased for $50,000 with a $45,000 loan. Several years later the loan has been reduced to $40,000 and the property is sold for $55,000. What is the seller's equity build-up at the time of sale?

Choose the one most appropriate answer for each. -financing where the borrower is not personally liable

Choose the one most appropriate answer for each. -increase in property value that the owner hopes will occur while owning it

Mortgage balance reduction is

Monetary benefits of investing in real estate come from

A four unit quadruplex has rental income of $500 per month per unit. Given a 5% vacancy rate, operating expenses of $700 per month, and mortgage payments of $1,500 per month, you can anticipate a monthly

The income tax savings that an investment can produce for its owner is called a tax ____________________.

____________________ is the increase in property value that the owner hopes will occur while owning it.

Choose the one most appropriate answer for each. -any method of depreciation that achieves a faster rate of depreciation than the straight-line method

A negative cash flow may be offset by

A real estate agent buys a house and lot for $49,900. He spends $1,200 to remodel it. What price must he sell the property for to realize a 20% profit?

If an investor is seeking the greatest risk and the greatest return, when should he buy?

Nature and Description of Real Estate

Rights and Interests in Land

Forms of Ownership

Transferring Title

Recordation Abstracts and Title Insurance

Contract Law

Real Estate Sales Contracts

Mortgage and Note

Deed of Trust

Lending Practices

The Loan and the Consumer

Sources of Financing

Types of Financing

Taxes and Assessments

Title Closing and Escrow

Real Estate Leases

Real Estate Appraisal

Licensing Laws and Professional Affiliation

The Principal-Broker Relationship: Employment

The Principal-Broker Relationship: Agency

Fair Housing, Ada, Equal Credit, and Community Reinvestment

Condominiums, Cooperatives, Puds, and Timeshares

Property Insurance

Land-Use Control

Real Estate and the Economy

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