Chapter 24

Question 1

actual
eviction

Answer 1

occurs when
a landlord physically
removes a tenant from the
leased property due to non-
payment of rent or another
breach of the lease
agreement, effectively
terminating the tenant’s right
to occupy the premises.

Question 2

Americans
with
Disabilities
Act

Answer 2

The Americans with
Disabilities Act is a federal
law that prohibits
discrimination against
individuals with disabilities in
all areas of public life,
including employment,
transportation, public
accommodations, and
government services

Question 3

budgeting

Answer 3

involves the
process of estimating and
allocating financial resources
to different expenses and
activities within a real estate
operation, such as property
maintenance, marketing, and
capital improvements.

Question 4

capital
expenditures

Answer 4

Capital expenditures (CapEx)
are significant investments in
a property that are expected
to provide long-term benefits
or improvements, such as
renovations, upgrades, or
major repairs.

Question 5

cash
reserve

Answer 5

refers to funds
set aside by a real estate
investor or property owner to
cover unexpected expenses,
emergencies, or periods of
financial hardship.

Question 6

effective
gross
income

Answer 6

Effective gross income (EGI)
is the total income generated
by a property after deducting
vacancy losses and
accounting for rental income
from other sources such as
parking fees or laundry
facilities

Question 7

financial
reporting

Answer 7

refers to
the process of preparing and
presenting financial
information about a real
estate property or business,
typically in the form of
financial statements such as
income statements, balance
sheets, and cash flow
statements

Question 8

inclusions

Answer 8

refer to items or
features that are included
with a property sale or lease,
typically specified in the
purchase agreement or lease
agreement.

Question 9

Management
plan

Answer 9

a
comprehensive document
outlining the strategies,
policies, and procedures for
managing a real estate
property or portfolio
effectively, covering areas
such as leasing,
maintenance, budgeting, and
tenant relations

Question 10

potential
gross
income

Answer 10

Potential gross income (PGI)
is the total income a property
could generate if it were fully
leased at market rental rates,
without considering any
vacancies or rental
concessions.

Question 11

reversionary
rights

Answer 11

refer to
the rights of a property owner
to reclaim possession of their
property after a particular
event or condition occurs,
such as the expiration of a
lease or the termination of a
life estate

Question 12

risk
management

Answer 12

involves
identifying, assessing, and
mitigating potential risks or
threats that could impact a
real estate investment or
business operation.

Question 13

What is the primary focus of property management according to the video?

Answer 13

Maximizing the value of real estate investments

Question 14

A property is listed for $415,000 and receives an offer for $435,000. How much is the offer as a percent of the listing price (rounded to the nearest percent)?

Answer 14

105%

Question 15

A borrower pays $12,000 for points on a $400,000 loan. How many points was she charged by the lender for points?

Answer 15

3 points

Question 16

Holly just bought a farm that consists of exactly 1/2 of a section. How many acres is this farm?

Answer 16

320 acres

640 acres of a section divided by 2 = 320 acres

Question 17

An apartment building has an NOI of $400,000, current-year reserve expenses of $40,000, interest expense of $260,000, and annual depreciation of $100,000. What is this property’s tax liability for the year if the tax bracket is 28%?

Answer 17

$22,400

$400,000 + $40,000 - $260,000 - $100,000 = a taxable income of $80,000. $80,000 X 28% = $22,400

Question 18

A homeowner sells her property on February 1. Annual taxes on the property are $1,800. What is the buyer’s credit for the tax bill? Assume the seller owns the day of closing, and use the 365-day method

Answer 18

$158 credit to buyer

$1,800 / 365 = $4.93 per day. $4.93 x 32 = $157.76 rounded up to $158 as a credit to the buyer.

Question 19

The current mill rate on a property totals 17 mills. The taxable value of a property is $500,000. What is the tax on this property?

Answer 19

$8,500

17 mills = 1.7% of the property’s value. $500,000 X .017 = $8,500

Question 20

Comparable A on a CMA has one more bedroom and one more bath than the subject. However, it has 400 SF less living area. If the comp sold for $1,000,000 and bedrooms are valued at $50,000, the baths @ $25,000, and living area @ $30,000, what is the indicated value of the subject?

Answer 20

$955,000

Adjust the comparable. $1,000,000 - $50,000 (for bedroom) - $25,000 (for bathroom) + $30,000 (for square feet surplus) = $955,000 value for the subject.

Question 21

Devan decided to proceed with a $600,000 interest-only loan that has monthly interest payments of $3,250 (annual total of $39,000). What is the interest rate of this interest-only loan?

Answer 21

6.50%

$39,000 / $600,000 = 6.5%

Question 22

Phillip wishes to value his new investment property utilizing a GRM (gross rent multiplier). The property grosses $3,500 in monthly rent and typical GRMs in the area are 140. What is valuation based on this data?

Answer 22

$490,000

$3,500 x a GRM of 140 = $490,000

Question 23

You are a salesperson with Performance Programs Brokerage and you just sold your first property for $800,000. The commission is 6% and co-brokerage split is 50-50. You negotiated a 65%-35% agent-broker split rate. How much will you receive as a commission?

Answer 23

$15,600