Course 3 Practice Test

Question 1

ing the assumptions provided below, solve for the answer.

Income
Rental Collections $105,000
Other Income $15,000
Vacancy $8,400
Effective Gross Income $111,600

Operating Expenses
Utilities $24,750
Maintenance $6,500
Salaries $4,100
Insurance $2,100
Replacement Reserves $4,350
Real Estate Taxes $4,800
Management Fee $2,961
Depreciation $11,500
Debt Service $11,000
Total $72,061

Net Cash Flow $51,039

Calculate the operating expense ratio.

Answer 1

44.4%

Question 2

Using the assumptions provided below, solve for the answer.

Income
Rental Collections $105,000
Other Income $15,000
Vacancy $8,400
Effective Gross Income $111,600

Operating Expenses
Utilities $24,750
Maintenance $6,500
Salaries $4,100
Insurance $2,100
Replacement Reserves $4,350
Real Estate Taxes $4,800
Management Fee $2,961
Depreciation $11,500
Debt Service $11,000
Total $72,061

Net Cash Flow $51,039

Calculate the breakeven ratio.

Answer 2

50%

Question 3

Using the assumptions provided below, solve for the answer.

Income
Rental Collections $105,000
Other Income $15,000
Vacancy $8,400
Effective Gross Income $111,600

Operating Expenses
Utilities $24,750
Maintenance $6,500
Salaries $4,100
Insurance $2,100
Replacement Reserves $4,350
Real Estate Taxes $4,800
Management Fee $2,961
Depreciation $11,500
Debt Service $11,000
Total $72,061

Net Cash Flow $51,039

Calculate the other income ratio as required in the valuation section of the underwriter narrative.

Answer 3

TBD

Question 4

Which of the following items are shown on an income statement?

Answer 4

Revenue and expenses from the property operation

Question 5

What is it called when units are rented at rates higher than the average market rate?

Answer 5

Gain to lease

Question 6

Which of the following is not a role of the underwriter when evaluating an operating statement?

Answer 6

Develop the budget for the following 12 months

Question 7

Which of the following is not considered an expense when calculating net operating income?

Answer 7

Debt service

Question 8

If other income is more than ______%, the underwriter must provide an explanation of why the other income is greater.

Answer 8

5%

Question 9

What is the minimum vacancy rate permitted by HUD for commercial income?

Answer 9

10%

Question 10

When tenants vacate at lease expiration, what is this time period called?

Answer 10

Turnover