Question 1

In a limited partnership, the limited partners cannot lose more than the amount they have invested.

Accepted Answer

A) True 
 B)False

Question 2

Choose the one most appropriate answer for each.
-an investor who takes an active role in property management, as defined by income tax law

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 3

A disclosure statement given prospective investors in a limited partnership, outlining the plan and prospects for the partnership as called a cash flow projection.

Accepted Answer

A) True 
 B)False

Question 4

An individual investor who is seeking the advantages of a partnership, but who wishes to avoid unlimited financial liability would join a limited partnership.

Accepted Answer

A) True 
 B)False

Question 5

In contrast to straight-line depreciation, ____________________ depreciation is any method that allows depreciation at a rate faster than straight-line.

Accepted Answer

The answer of In contrast to straight-line depreciation, ____________________ depreciation...

Question 6

Negative leverage occurs when an investment property depreciates in value.

Accepted Answer

A) True 
 B)False

Question 7

One of the main advantages of being a limited partner is

Accepted Answer

A)  the profits of a limited partner are tax free. 
B)  limited partners can help with management. 
C)  limited partners are not held responsible for management. 
D)  limited partners are separate legal persons. 
A)  the profits of a limited partner are tax free. 
B)  limited partners can help with management. 
C)  limited partners are not held responsible for management. 
D)  limited partners are separate legal persons.

Question 8

Choose the one most appropriate answer for each.
-the possibility that an investor will lose his money in an investment

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 9

When the benefits of borrowing money for investing exceeds the costs of borrowing, you have

Accepted Answer

A)  negative leverage. 
B)  positive leverage. 
C)  usury. 
D)  capitalization rate. 
A)  negative leverage. 
B)  positive leverage. 
C)  usury. 
D)  capitalization rate.

Question 10

For most people, the best time to invest in high-risk investments is between the ages of 55 and 65.

Accepted Answer

A) True 
 B)False

Question 11

Choose the one most appropriate answer for each.
-the impact that borrowed funds have on investment return

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

Choose the one most appropriate answer for each.
-a limited partnership wherein properties are purchased after the limited partners have invested their money

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 13

When an investor speaks of an investment that will pencil out, she means there will be more book work involved than the investment justifies.

Accepted Answer

A) True 
 B)False

Question 14

If an investor has to dip into cash reserves to keep a property going, the property has a ____________________ cash flow.

Accepted Answer

The answer of If an investor has to dip into...

Question 15

If an investor uses $250,000 of his own money when buying a $500,000 building, he is using

Accepted Answer

A)  50% leverage. 
B)  100% leverage. 
C)  200% leverage. 
D)  capital gains. 
A)  50% leverage. 
B)  100% leverage. 
C)  200% leverage. 
D)  capital gains.

Question 16

The cash-on-cash ratio for a property that has a cash flow of $16,900 and could be purchased with a down payment of $130,000 would be 7.69%.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following real property investments is most likely to produce the largest annual depreciation allowance expressed as a percentage of owner's equity? Assume each is newly purchased for 100% cash.

Accepted Answer

A)  Large tract of land 
B)  Old apartment building 
C)  Retail business in rented space 
D)  New business 
A)  Large tract of land 
B)  Old apartment building 
C)  Retail business in rented space 
D)  New business

Question 18

You are offered a four-unit residential building in which each unit rents for $500 per month. Given a 5 percent 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 income of $200. 
B)  net spendable income of $300. 
C)  negative cash flow of $200. 
D)  negative cash flow of $300. 
A)  net spendable income of $200. 
B)  net spendable income of $300. 
C)  negative cash flow of $200. 
D)  negative cash flow of $300.

Question 19

An investor is using borrowed money to increase the rate of return on a cash investment in an income property. He is

Accepted Answer

A)  using leverage. 
B)  using a trust deed. 
C)  kiting. 
D)  insolvent. 
A)  using leverage. 
B)  using a trust deed. 
C)  kiting. 
D)  insolvent.

Question 20

Tax laws will not allow depreciation on a building to be started over each time the property is sold.

Accepted Answer

A) True 
 B)False

Exam 26: Investing in Real Estate

In a limited partnership, the limited partners cannot lose more than the amount they have invested.

Choose the one most appropriate answer for each. -an investor who takes an active role in property management, as defined by income tax law

A disclosure statement given prospective investors in a limited partnership, outlining the plan and prospects for the partnership as called a cash flow projection.

An individual investor who is seeking the advantages of a partnership, but who wishes to avoid unlimited financial liability would join a limited partnership.

In contrast to straight-line depreciation, ____________________ depreciation is any method that allows depreciation at a rate faster than straight-line.

Negative leverage occurs when an investment property depreciates in value.

One of the main advantages of being a limited partner is

Choose the one most appropriate answer for each. -the possibility that an investor will lose his money in an investment

When the benefits of borrowing money for investing exceeds the costs of borrowing, you have

For most people, the best time to invest in high-risk investments is between the ages of 55 and 65.

Choose the one most appropriate answer for each. -the impact that borrowed funds have on investment return

Choose the one most appropriate answer for each. -a limited partnership wherein properties are purchased after the limited partners have invested their money

When an investor speaks of an investment that will pencil out, she means there will be more book work involved than the investment justifies.

If an investor has to dip into cash reserves to keep a property going, the property has a ____________________ cash flow.

If an investor uses $250,000 of his own money when buying a $500,000 building, he is using

The cash-on-cash ratio for a property that has a cash flow of $16,900 and could be purchased with a down payment of $130,000 would be 7.69%.

Which of the following real property investments is most likely to produce the largest annual depreciation allowance expressed as a percentage of owner's equity? Assume each is newly purchased for 100% cash.

You are offered a four-unit residential building in which each unit rents for $500 per month. Given a 5 percent vacancy rate, operating expenses of $700 per month, and mortgage payments of $1,500 per month, you can anticipate a monthly

An investor is using borrowed money to increase the rate of return on a cash investment in an income property. He is

Tax laws will not allow depreciation on a building to be started over each time the property is sold.

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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