Broker Associate Flashcards
Balance sheet
A balance sheet shows the company’s financial position at a stated moment in time
Current ratio
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
Tax Shelter
an investment that shields income from payment of income taxes.
Net Present Value
the present value of future cash flows (at a discount rate) minus the investor’s down payment
Internal Rate of Return
the discount rate at which present values of future cash flows equal the down payment
Quick Ratio Formula
Current Assets (minus inventory)
———————————————-
Current Liabilities
What are appraisals?
Opinions of value based on comparable properties
Appraisals are essential for determining the market value of real estate.
Define assemblage in real estate.
The combining of two or more adjacent properties
This process can increase the overall value of the combined properties.
What are Automated Valuation Models (AVMs)?
Data analyses that compile comparable data using a computer database of closed sales
AVMs use mathematical modeling to value properties.
What does ‘cost’ refer to in real estate?
The amount to produce or acquire something
Cost is a fundamental concept in determining property value.
What is the cost approach in property valuation?
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.
What is curable depreciation?
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.
Define depreciation in the context of real estate.
Loss in value caused by wear and tear, poor design, or surroundings
It reflects the decrease in property value over time.
What is economic life or useful life?
The total estimated time in years that an improvement will contribute to property value
Understanding useful life helps in making investment decisions.
What is an indicator of a structure’s condition and utility?
Effective age
This term indicates how old a property is in terms of its physical state.
What does the Gross Income Multiplier (GIM) represent?
The ratio between a property’s gross annual income and its selling price
GIM can include income from sources other than rental income.
How is Gross Living Area (GLA) calculated?
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.
What is the Gross Rent Multiplier (GRM)?
The ratio between a property’s gross monthly rental income and its selling price.
Define Highest and Best Use.
The most profitable legal way that a property can be used.
What does the Income Approach estimate?
The market value based on the present worth of future income from the subject property.
What is Incurable Depreciation?
Occurs when a building component has been added or repaired but the owners cannot recapture the added value.
What is Investment Value?
The value of a property to a particular investor based on the investor’s desired rate of return and risk tolerance.
How is Market Value defined?
The most probable price a property should bring in a competitive and open market.
What is Net Operating Income (NOI)?
The income remaining after subtracting all relevant operating expenses from Effective Gross Income (EGL).
What does Overimprovement refer to?
When an owner invests more money in a structure than can be reasonably expected to be recaptured.
Define Plottage.
The added value resulting from assembling two or more properties into one large parcel.
What is Potential Gross Income (PGI)?
Total annual income a property would produce if fully rented with no collection losses.
Fill in the blank: The amount paid for something is referred to as _______.
Price
What does the Principle of Substitution state?
A prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property.
What is the principle of Progression?
The value of an inferior property is enhanced by its association with superior properties of the same type.
What is the purpose of appraisals?
To determine the problem to be solved and the type of value to be estimated
This is relevant for broker candidates only.
What is Reconciliation in the context of appraisals?
A process of weighted averaging used in the sales comparison approach to estimate value.
Do you have to have a license permit for a property to be used as an STR in the state of Florida
Yes, the property will need a resort dwelling / resort condominium license, which must be renewed annually - cost for 2025 is $170
If you sell a short term rental in the state of Florida does the license transfer with the sale of the property?
No - Flórida law does not let the DBPR transfer a license - new owners must apply for a new license
What is an OTA?
Online Travel Agency - Airbnb, Vrbo, Booking.com, Expedia, and others
What is a Channel Manager
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.
Key Features of a Channel Manager -
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.
Milestone Inspection Requirements
Florida Statutes §553.899: Applies to condominiums & cooperatives that are three stories and higher
What are the key provisions of the Milestone Report
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.
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.
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.
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.
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.
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.
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
What are the components of the bundle of legal rights in real property ownership?
The rights of disposition, enjoyment, exclusion, possession, and control
These rights define the ownership and use of real property.
What are common elements in a condominium?
Roofs, elevators, and recreational facilities
These elements are legally attached to condominium units and transferred with the units when sold.
What does concurrent ownership mean?
Ownership by two or more persons at the same time
What are condominium documents?
A set of papers describing the condominium and the association
What is a condominium?
A multiunit project consisting of individual ownership of a dwelling unit and undivided ownership of common areas
What is a cooperative in real estate?
A multiunit dwelling owned by a corporation where owners purchase shares and receive a proprietary lease
What is the Declaration of Condominium?
A recorded document that creates the condominium
What is an estate for years?
A written lease with a definite termination date
What occurs in an estate in severalty?
Title to property is held by one person
What is a fee simple estate?
The most common type of ownership; the most comprehensive collection of property rights that may be inherited
What are Fbitures?
Objects that were personal property but have become part of real property by attachment.
What is a freehold estate?
An ownership interest for an indefinite period of time.
What does homestead law provide?
Certain types of protection and benefits to homeowners regarding their permanent residence.
What is joint tenancy?
An ownership interest between two or more persons with right of survivorship.
What does land refer to?
The surface of the earth and everything attached to it by nature.
What is a leasehold estate?
An interest in real property that a tenant possesses, measured in calendar time.
What is a life estate?
A freehold estate that ends with the death of a named person; ownership for an individual’s natural life span.
What are littoral rights?
Rights associated with land abutting tidal bodies of water, such as an ocean, sea, or lake.
What are nonfreehold estates?
Estates that have a known duration and do not involve an ownership interest.
What is personal property or chattel?
Any tangible item that is not real property and is movable.
What is a proprietary lease?
The document that entitles a shareholder in a cooperative to possession of a unit.
What is a prospectus in real estate?
A document summarizing major points of condominium documents required for developments with more than 20 residential units.
What does real estate include?
The land and all improvements permanently attached to land.
What does real property encompass?
All real estate plus the legal bundle of rights inherent in the ownership of real estate.
Who is a remainderman?
The third party to whom a property is transferred at the end of a life estate.
What does the right of survivorship mean?
When a co-owner dies, their share goes to the surviving co-owners and not to the deceased tenant’s heirs.
What are riparian rights?
Rights associated with land abutting the banks of a river, stream, or other body of water.
What is separate property?
Nonmarital assets.
What is tenancy at sufferance?
Exists when a tenant continues possession after the tenant’s right has ended, without the owner’s permission.
What is tenancy at will?
A leasehold in which the tenant holds possession of the premises with the owner’s permission but without a fixed term.
