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Real Estate > Broker Associate > Flashcards

Broker Associate Flashcards

1
Q

Balance sheet

A

A balance sheet shows the company’s financial position at a stated moment in time

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2
Q

Current ratio

A

the measure of the business’s ability to meet short-term obligations and is calculated by dividing the business’s current assets by its current liabilities

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3
Q

Tax Shelter

A

an investment that shields income from payment of income taxes.

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4
Q

Net Present Value

A

the present value of future cash flows (at a discount rate) minus the investor’s down payment

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5
Q

Internal Rate of Return

A

the discount rate at which present values of future cash flows equal the down payment

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6
Q

Quick Ratio Formula

A

Current Assets (minus inventory)
———————————————-
Current Liabilities

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7
Q

What are appraisals?

A

Opinions of value based on comparable properties

Appraisals are essential for determining the market value of real estate.

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8
Q

Define assemblage in real estate.

A

The combining of two or more adjacent properties

This process can increase the overall value of the combined properties.

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9
Q

What are Automated Valuation Models (AVMs)?

A

Data analyses that compile comparable data using a computer database of closed sales

AVMs use mathematical modeling to value properties.

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10
Q

What does ‘cost’ refer to in real estate?

A

The amount to produce or acquire something

Cost is a fundamental concept in determining property value.

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11
Q

What is the cost approach in property valuation?

A

Estimates value by taking cost minus depreciation plus site value

Based on the theory that a knowledgeable purchaser will pay no more than the cost of acquiring a similar site.

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12
Q

What is curable depreciation?

A

When a building component has been added or repaired and the owners can recoup their investment

This type of depreciation can often be fixed through renovations.

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13
Q

Define depreciation in the context of real estate.

A

Loss in value caused by wear and tear, poor design, or surroundings

It reflects the decrease in property value over time.

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14
Q

What is economic life or useful life?

A

The total estimated time in years that an improvement will contribute to property value

Understanding useful life helps in making investment decisions.

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15
Q

What is an indicator of a structure’s condition and utility?

A

Effective age

This term indicates how old a property is in terms of its physical state.

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16
Q

What does the Gross Income Multiplier (GIM) represent?

A

The ratio between a property’s gross annual income and its selling price

GIM can include income from sources other than rental income.

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17
Q

How is Gross Living Area (GLA) calculated?

A

By taking the exterior dimensions of a house and subtracting the garage square footage and any other non-heated square footage

This is relevant for broker candidates only.

18
Q

What is the Gross Rent Multiplier (GRM)?

A

The ratio between a property’s gross monthly rental income and its selling price.

19
Q

Define Highest and Best Use.

A

The most profitable legal way that a property can be used.

20
Q

What does the Income Approach estimate?

A

The market value based on the present worth of future income from the subject property.

21
Q

What is Incurable Depreciation?

A

Occurs when a building component has been added or repaired but the owners cannot recapture the added value.

22
Q

What is Investment Value?

A

The value of a property to a particular investor based on the investor’s desired rate of return and risk tolerance.

23
Q

How is Market Value defined?

A

The most probable price a property should bring in a competitive and open market.

24
Q

What is Net Operating Income (NOI)?

A

The income remaining after subtracting all relevant operating expenses from Effective Gross Income (EGL).

25
Q

What does Overimprovement refer to?

A

When an owner invests more money in a structure than can be reasonably expected to be recaptured.

26
Q

Define Plottage.

A

The added value resulting from assembling two or more properties into one large parcel.

27
Q

What is Potential Gross Income (PGI)?

A

Total annual income a property would produce if fully rented with no collection losses.

28
Q

Fill in the blank: The amount paid for something is referred to as _______.

A

Price

29
Q

What does the Principle of Substitution state?

A

A prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property.

30
Q

What is the principle of Progression?

A

The value of an inferior property is enhanced by its association with superior properties of the same type.

31
Q

What is the purpose of appraisals?

A

To determine the problem to be solved and the type of value to be estimated

This is relevant for broker candidates only.

32
Q

What is Reconciliation in the context of appraisals?

A

A process of weighted averaging used in the sales comparison approach to estimate value.

33
Q

Do you have to have a license permit for a property to be used as an STR in the state of Florida

A

Yes, the property will need a resort dwelling / resort condominium license, which must be renewed annually - cost for 2025 is $170

34
Q

If you sell a short term rental in the state of Florida does the license transfer with the sale of the property?

A

No - Flórida law does not let the DBPR transfer a license - new owners must apply for a new license

35
Q

What is an OTA?

A

Online Travel Agency - Airbnb, Vrbo, Booking.com, Expedia, and others

36
Q

What is a Channel Manager

A

A Channel Manager for short-term vacation rental businesses is a software tool or platform that helps property managers and hosts streamline the management of their listings across multiple online travel agencies (OTAs) like Airbnb, Vrbo, Booking.com, Expedia, and others. It acts as a centralized hub, syncing information between these platforms to simplify operations and prevent issues like double bookings.

37
Q

Key Features of a Channel Manager -

A

Centralized Listing Management

Allows you to update property details, descriptions, photos, and pricing across multiple OTAs from a single interface.
Calendar Synchronization

Syncs availability calendars in real-time to prevent overlapping reservations and ensure accuracy across all platforms.
Dynamic Pricing Updates

Enables automated pricing adjustments based on factors like demand, seasonality, and competitor pricing.
Reservation Management

Consolidates all booking information into one dashboard, making it easier to track reservations, cancellations, and inquiries.
Automation of Routine Tasks

Automates communication with guests, such as booking confirmations, pre-arrival instructions, and post-stay follow-ups.
Reporting and Analytics

Provides insights into booking trends, revenue performance, and occupancy rates to help optimize property management strategies.
Multi-Property Management

Supports managing multiple properties, making it ideal for larger property management companies or hosts with several listings.

38
Q

Milestone Inspection Requirements

A

Florida Statutes §553.899: Applies to condominiums & cooperatives that are three stories and higher

39
Q

What are the key provisions of the Milestone Report

A

When Inspections Are Required:

Phase I Milestone Inspection is required:
When a building reaches 25 years of age (if located within 3 miles of the coastline) or 30 years elsewhere.
Every 10 years thereafter.
Inspection Process:

Phase I evaluates the building’s general condition.
If issues are found, a more detailed Phase II inspection is required.
Responsibility:

The condominium or cooperative association is responsible for ensuring inspections are completed and submitted to the local building authority.

40
Q

Reserve Study and Funding Requirements
Covered in:
Florida Statutes §718.112(2)(f) and §718.112(2)(g) (Condominium Act)
These sections mandate the reserve funding and study requirements for capital expenditures and deferred maintenance.

A

Key Provisions:
Mandatory Reserves:

Associations must include reserves for:
Roof replacement.
Painting.
Pavement resurfacing.
Any item exceeding $10,000 in replacement cost or deferred maintenance.
Waiver or Reduction:

Associations may vote to waive or reduce reserve funding but must comply with strict transparency and procedural requirements.
Reserve Studies:

Although not explicitly mandated by statute, a reserve study is a common tool used to determine funding needs for the above items.

41
Q

Structural Integrity Requirements
Covered in:
Florida Statutes §718.301 and §553.899
These provisions cover structural integrity reserve studies and the requirement to assess the physical condition of critical building components.

A

Key Provisions:
Structural Integrity Reserve Study (SIRS):

Required for all condominiums three stories or higher by December 31, 2024.
Must include visual inspections and assessments of:
Roof.
Load-bearing walls.
Fireproofing and fire protection systems.
Plumbing.
Electrical systems.
Windows and doors.
Inspection Documentation:

Associations must maintain inspection reports and make them accessible to unit owners.

42
Q

Florida Statutes §689.302 deals with the conveyance of real property to or by a trust. It specifically addresses the execution and acknowledgment of instruments related to such conveyances.

A

Key Points of F.S. 689.302:
Trusts as Grantees or Grantors:

This statute allows trusts to be named as grantees (receivers of property) or grantors (transferors of property) in deeds and other instruments related to real estate.
Execution and Acknowledgment Requirements:

The statute ensures that instruments conveying property to or by a trust are valid if they comply with the execution and acknowledgment requirements of the law.
Trustee Involvement:

The trustee of the trust typically acts as the signing authority for any conveyance of real property on behalf of the trust.
Purpose:

The law is designed to facilitate real property transactions involving trusts, ensuring such transactions are recognized and enforceable.
Practical Implications:
Real property can be directly titled in the name of a trust (e.g., “The Smith Family Trust”) instead of an individual, enabling estate planning and asset protection strategies.
Trustees must ensure that transactions comply with this statute and other related laws to avoid disputes or issues with the conveyance’s validity

Real Estate (1 decks)

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