Real Estate Consulting and Investment Analysis

A home that has features that are sought after in your area will dictate a higher price.

• AMENITIES

Great for investors who have access to a significant amount of capital, either personally or through their network, and wish to purchase properties free and clear.

• CASH FINANCING

Which of the following characteristics are applicable to real estate investment trusts (REITs)?

• REIT shares cannot be bought or sold in the secondary market and are, therefore, considered illiquid.
• Any losses from the real estate portfolio flow through to the REIT shareholders.
• REITs have guaranteed minimum dividends.
• Dividends from REITS are taxed as ordinary income.

Buying and owning real estate is an investment strategy that can be both satisfying and lucrative.

• True
• False

When an individual is purchasing their first home, a sale occurs when the home is sold to the buyer.

• True
• False

Cash financing enables investors to save on interest, increase their cash flow, and receive instant equity in their investment. It also has the ability to save investors on the purchase amount.

• True
• False

A customer is considering adding a real estate investment trust (REIT) to their portfolio. They list all of the following as "plusses" or advantages. You correct your customer and point out that one of them is not an advantage of investing in REITs. Which of the following is NOT an advantage of investing in REITs?

• Using real estate as a potential hedge against the movement of other equity securities the customer owns
• Having a professionally managed portfolio of commercial real estate assets
• Being able to divest of the shares easily
• Dividend treatment

Which of the following is the most important factors for investing in real estate?

• Location of the Property
• all of the above
• Valuation of the Property
• Investment Purpose and Investment Horizon

An investment manager could earn his living trading bundles of mortgages, called mortgage-backed securities, and other kinds of debt financing.

• True
• False

Which of the following guidelines is NOT included in preparing your home for market?

• Paint
• Curb Appeal
• Cleanliness
• Marketing Plan

Real property of an owner who dies intestate is distributed according to the laws of the state in which the owner resided at at the time of death

• True
• False

Location, development, and improvements are the primary ways that residential and commercial real estate can appreciate in value

• True
• False

The lease is not a loan on security but qualifies as a lease, it will be considered a tax oriented lease.

• True
• False

Mortgages are debt investments in which the mortgage holder receives a stream of payments like a bondholder (principal and interest)

• True
• False

A fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan but the monthly principal and interest payment never changes from the first mortgage payment to the last

• True
• False

Is the real estate agents work with builders?

• True
• False

A copy of the property tax bill is typically provided to the buyer by the seller after closing the transactions.

• True
• False

A pour-over will is used in creating a trust into which your assets flow.

• True
• False

A real estate that includes nonresidential structures such as office buildings, warehouses, and retail buildings. These buildings may be free-standing or in shopping malls.

• None of the above
• Commercial
• Residential
• Industrial

A real estate that includes undeveloped land, houses, condominiums, and townhouses. The structures may be single-family or multi-family dwellings and may be owner-occupied or rental properties is called______.

• Residential
• Commercial
• industrial
• none of the above

Establishing the list price that will attract the most buyers at the best price is the first step in developing a marketing plan.

• True
• False

Property portfolio management it deals with the objectives of increasing the life span of properties together with the contribution to economic worth of the assets.

• True
• False

Mortgages are debt investments in which the mortgage holder receives a stream of payments like a bondholder (principal and interest).

• True
• False

An investment company that manages investment assets instead of selling goods and services.

• True
• False

In Conveyance type lease, the lease will be for a long-period with a clear intention of conveying the ownership of title on the lessee.

• True
• False

In a sale and leaseback, a company owning the asset sells it to the lessor. The lessor pays immediately for the asset but leases the asset to the seller. Thus, the seller of the asset becomes the lessee.

• True
• False

Liquidity refers to how quickly an asset may be converted into cash. Real estate is not highly liquid over the short term.

• True
• False

Which of the following is an equity security?

• Mortgage-secured bond.
• Government National Mortgage Association pass-through certificate
• Real estate investment trust share
• Collateralized mortgage obligation

What do you call a person who rents land or property from a lessor?

• Lessee
• Manager
• none of the above
• Lease

Which of the following is not the characteristic of a real estate as an investable asset?

• Properties are immovable and basically indivisible so they are illiquid
• Transaction costs and management fees for real estate investments are high
• It is an intangible asset
• Each real estate asset is a unique investment because of the property and buildings that can be built on it

The property value goes up every year, hopefully, appreciation can result from inflation or increases in demand for property or improvement to the property

• True
• False

Deflation is the increase in the amount of money in circulation. When more money is available, its value declines. When the value of money declines, wholesale and retail prices rise.

• True
• False

Investors who are well-connected can often tap into capital from personal connections, borrowing money at a specified interest rate and payback period

• PRIVATE MONEY LENDERS

In seller financing, the buyer of the property will make payments directly to the seller of the property, rather than going through a bank

• True
• False

A leasehold estate is considered personal property

• True
• False

Which of the following terms or phrases does NOT apply to REITs?

• Managed
• Secondary market
• Dividends taxed at full ordinary income rates
• Redeemable

In an Import lease, the company providing equipment for lease may be located in a foreign country but the lessor and the lessee may belong to the same country. The equipment is more or less imported.

• True
• False

The following are the good reasons to have a WILL except:

• spend all your money
• You can identify who should care for your children. Without a will, the courts will decide
• You can keep your assets out of the hands of people you don't want to have them (like an estranged relative)
• You can be clear about who gets your assets. You can decide who gets what and how much

Identify the following terms :

• realtor
• A unit in a high rise building that you own.
• Answer 2
• condo
• A person who pays for the right to live in a residence owned by someone else
• Answer 3
• tenant
• a paper that shows who owns a certain building or piece of land
• Answer 4
• deed
• Someone who owns a house or property that they rent to a tenant
• Answer 5
• landlord

A buyer who purchases real property and assumes the sellers debt becomes personally obligated for the repayment of the entire debt

• True
• False

Completion of the project should be properly monitored not allowing any deviation from the expected needs and wants but having necessary alteration according to altered needs and wants if any in order to maximize the users’ satisfaction.

• True
• False

Wills that are written and signed by the testator but not witnessed are known as oral wills.

• True
• False

Cash dividends from REITs are:

• taxed at a maximum rate for qualified dividends
• taxed as long-term capital gains
• taxed as ordinary income
• not taxed

A real estate that includes factories, business parks, mines, and farms. These properties are usually larger in size and locations may include access to transportation hubs such as rail lines and harbors

Tenant improvements are major alterations to the interior of a commercial or industrial property, to accommodate the tenant

• Tenant improvements are major alterations to the interior of a commercial or industrial property, to accommodate the tenant
• Select one:
• True
• False

Property assets management is dealing with strategies of formalizing and monitoring of an organization’s property so as to achieve the maximum portfolio return and minimum portfolio risk.

• True
• False

Leveraging a purchase means that you use the banks money to earn a return on your investment.

• True
• False

Intrinsic value is the result of a person's individual choices and preferences for a given geographic area. For ex: a property located in pleasant neighborhood near attractive business & shopping areas has greater intrinsic value to most people than similar property in a more isolated location.

• True
• False

A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.

• MORTGAGE

Peer-to-peer lending allows investors to borrow money from other investors, or groups of investors (hence the name).

• True
• False

The elements of a valid lease are

• True
• False

A critical decisions relating to properties such as acquiring, constructing, changing the uses and users, and demolishing or selling properties etc. are highly expensive for organizations

• True
• False

Individuals who have elected to create savings through a self-directed IRA may make the decision to tap into their account as a way to access capital.

• SELF DIRECTED IRA ACCOUNTS

This is a great option for investors trying to raise the last portion of funding for a project. Peer-to-peer lending can offer high flexibility and low interest rates.

• PEER-TO-PEER LENDING

Buy & Sell (Long-term) means to work toward long-term goals such as retirement, college tuition, or other significant expenses

• True
• False

Real estate investment trusts, or REITs, provide a way for investors to receive capital appreciation and income from real estate without having to actually purchase and maintain property

• True
• False

The CONS of the Real estate trading requires a deeper market knowledge paired with luck. Hot markets can cool unexpectedly, leaving short-term traders with losses or long-term headaches

• True
• False

Buyers and sellers can sometimes strike up a mutually beneficial agreement, allowing the investor and seller to avoid having to go through a private lender altogether

• SELLER FINANCING

Listing your home with an Agency Real Estate professional agent is the second step on the path to a successful closing.

• True
• False

A Cost Approach refers to the comparable sales of properties with similar characteristics—most common and suitable for both new and old properties.

• True
• False

Identify which of the following broad categories suits your purpose, and then plan accordingly:

• Buy & Sell (Short-term)
• Regular income and long-term value appreciation. Must develop the temperament to be a landlord (or hire a property manager) to handle possible disputes and legal issues, manage tenants, repair work, etc
• Answer 2
• Buy & Lease
• Savings on rentals, benefit of self-utilization, and value appreciation.
• Answer 3
• Buy & Self-Use
• A long-term goals such as retirement, college tuition, or other significant expenses
• Answer 4
• Buy & Sell (Long-term)

The following is the Real Estate agents do when making a house ready for sale EXCEPT:

• Lay holes all over the ground
• Calculate the area of a house
• Put up advertising signs
• Sign a contract

What do Real Estate agents do?

• Shows you toys
• Help people buy homes
• Help control the electricity
• Make homes

Which of the following is a PROS in investing a real estate?

• Diversifies portfolio
• May require active management, expertise
• Requires big initial capital outlay
• Influenced by highly local factors

REITs can distribute all of the following to their shareholders EXCEPT:

• cash dividends
• stock dividends
• capital gains
• capital losses

The sales agreement details the payments and credits that are due to the seller and the payments and PESO amounts due from the buyer, details include transaction costs such as title and tax searches, and adjustments, if applicable, such as prepaid taxes.

• True
• False

Estate planning involves planning for how an individual’s assets will be preserved, managed, and distributed after death

• Estate planning involves planning for how an individual’s assets will be preserved, managed, and distributed after death
• Select one:
• True
• False

A listing agreement is the same as a contract for the sale of real estate.

• True
• False

A Home Protection Plan that protects a buyer during the first year of home ownership may add stability to your home.

• HOME WARRANTY

The lessor or the owner of the asset is a specialist of the asset which he is leasing out. He not only leases out but also gives specialized personal service to the lessee.

• True
• False

It is a long-term lease and the lessee will be paying much more than the cost of the property or equipment to the lessor in the form of lease charges

• FINANCIAL LEASE

All contracts must be in writing to be enforceable.

• True
• False

A company set up to invest in real estate, mortgages, construction, and development loans that must distribute at least 90% of its net income to avoid paying taxes on the income distributed is called:

• a unit investment trust
• an open-end investment company
• a trust indenture
• a real estate investment trust

A full pay-out lease is one in which the lessor recovers the full value of the leased asset by way of leasing.

• True
• False

One of the advantages of real estate investing is having the opportunity to help the local economy. As a real estate investor, you will have the opportunity to employ local licensed contractors, purchase building materials, and generally stimulate the local economy near the construction site

• True
• False

Investing in real estate offers inflation protection as well as the portfolio diversification benefits of owning a physical asset. Real estate is a tangible asset that can always be monetized through renting or residing in the property, regardless of financial market conditions.

• True
• False

Once you and the buyer have agreed upon price, you are ready for a formal inspection of your home to detect defects or problems.

• True
• False

In case, the lessor enters into any tie up arrangement with manufacturer for the marketing, it is called sales aid lease.

• True
• False

It is a transaction between two or more parties, typically a buyer and a seller, in which goods or services are exchanged for money or other assets

• SALE

A real estate that includes undeveloped land, houses, condominiums, and townhouses. The structures may be single-family or multi-family dwellings and may be owner-occupied or rental properties.

Cash flow refers to how much money is left after expenses. Positive cash flow is key to a good rate of return on an investment property.

• True
• False

Private money lenders provide short-term, high-rate loans for real estate investors.

• True
• False

A tenant who is leasing only part of a building is not required to continue paying rent if the leased premises are destroyed.

• A tenant who is leasing only part of a building is not required to continue paying rent if the leased premises are destroyed.
• Select one:
• True
• False

Which of the following statements regarding real estate investment trusts are TRUE?

• II and IV
• I and IV
• B) I and III
• C) II and IV
• D) II and III
• II and III
• I and III

What do Real Estate agents put up if a home is open?

Lease across national frontiers are called cross border lease, Shipping, air service, etc., will come under this category.

• True
• False

In non-net lease, the lessor is in charge of maintenance insurance and other incidental expenses. In a net lease, the lessor is not concerned with the above maintenance expenditure. The lessor confines only to financial service.

• True
• False

Accessible to investors who have less-than-perfect credit or financial history, and are in need of a short-term loan.

• HARD MONEY LENDERS