Chapter 12: Investing and Other Broker-Related Fields

Question 1

During one of these periods, the cost of everything rises, including real estate.

Answer 1

Inflationary period

Question 2

An individual who, for compensation or gain (or in the expectation of) takes a residential mortgage loan application and/or offers/negotiates terms of a residential mortgage loan.

This individual also is usually the borrower’s main point of contact throughout the entire home loan process.

Answer 2

Mortgage loan originator (MLO)

Question 3

A formal declaration before a duly authorized officer, by a person executing an instrument that such execution is his act and deed.

Answer 3

Acknowledgement

Question 4

The real estate law defines the sale of a business as this.

Answer 4

Business opportunity

Question 5

In California, an apartment complex with 16+ units requires this.

Answer 5

On-site property manager

Question 6

An allowance for vacancies and uncollectible rents.

Answer 6

Vacancy factor

Question 7

The result of dividing the net operating income by the selling price.

Answer 7

Capitalization (cap) rate

Question 8

In a business with good reputation, the customer base with the expectation of continued public patronage.

Answer 8

Goodwill

Question 9

This person is engaged in the secondary market, in addition to a host of activities that come under the definition of real property securities.

Answer 9

Real property securities dealer

Question 10

As short-term lenders, this entity is very active in the urban mortgage market.

Answer 10

Commercial banks

Question 11

Includes all first and junior trust deeds that comprise the financing for the purchaser.

Answer 11

Loan

Question 12

The amount the buyer is to pay towards the purchase price.

Answer 12

Down payment

Question 13

Selling a property for more than it’s worth – a function of supply demand.

Answer 13

Appreciation

Question 14

These expenses do not vary depending on the occupancy of the property.

Answer 14

Fixed expenses

Question 15

These funds are set aside for replacing short-lived components of the property.

Answer 15

Reserves for replacement

Question 16

Under these terms, the seller agrees that he will not open a competing business for a period of time within a specified geographical area.

Answer 16

Covenant not to compete

Question 17

A property temporarily generates rents for other than its future zoned use.

Answer 17

Interim use

Question 18

This type of bank specializes in housing loans, particularly for single-family dwellings up to four units.

Answer 18

Savings bank

Question 19

This house is built on a steel chassis and equipped with wheels so that it can be pulled by a truck from the factory to a dealers lot and then to the site in a park or on private land

Answer 19

Manufactured home

Question 20

These companies often invest in large commercial projects, like shopping malls, and serve markets far away from their home offices.

Answer 20

Life insurance companies

Question 21

These expenses include fixed and variable expenses, as detailed in the bottom half of the income property statement.

Answer 21

Operating expenses

Question 22

The difference between the income generated from an income property and expenses associated with it, including taxes, mortgage payments, and operating expenses.

Answer 22

Cash flow

Question 23

A type of real estate investment company that sells ownership shares. The qualified company itself pays no income taxes if at least 90% of the income is distributed to the owners/participants.

Answer 23

REITs

Question 24

The total income that property is capable of producing at full occupancy, without any deductions for expense.

Answer 24

Potential Gross Income