Real Estate Quiz 5

Question 1

When a tenant agrees to pay rent and specific expenses related to lease space, he has signed a (an):
Select one:
a. Net lease 
b. Add-on lease 
c. Gross lease 
d. Sandwich lease

Answer 1

Net lease

Question 2

In which of the following situations can a property owner claim tax depreciation?
Select one:
a. The total cost of acquisition of an income-producing property
b. A principal residence and a second home
c. The acquisition cost of an income-producing property allocated to the building
d. The value of all buildings owned by a property owner

Answer 2

The acquisition cost of an income-producing property allocated to the building

Question 3

The amount required to construct a new building of equal utility to the building being appraised is:
Select one:
a. Replacement cost 
b. Depreciated cost 
c. Reproduction cost 
d. Current cost

Answer 3

Replacement cost

Question 4

The prime objective of a successful manager should be to:
Select one:
a. Oversee all paperwork and menial tasks to assure maximum productivity
b. Multiply his or her own productive efforts through the efforts of other people
c. Relate his or her personal goals to the staff
d. Create office harmony at all times

Answer 4

Multiply his or her own productive efforts through the efforts of other people

Question 5

If a commercial property was purchased in January of 2006 for $525,000 and the land value was estimated to be 25% of the purchase price, what was the depreciation allowance for 2006?
Select one:
a. $10,096.15 
b. $12,500.00 
c. $13,409.09 
d. $14,318.18

Answer 5

$10,096.15

Question 6

An apartment house was purchased for a contract price of $400,000. The buyer spends $3,500 for an appraisal, $2,000 for a special survey, and $1,500 in attorney's fees. The land was appraised for market value of $80,000. The depreciable basis is:
Select one:
a. $320,000 
b. $325,600 
c. $400,000 
d. $407,000

Answer 6

$320,000

Question 7

Forest is a veteran and has employed Broker Bill to assist him in finding a home. Bill was able to find a home that Forest liked and proceeded to prepare the contract. The contract stipulated that Forest would pay intangible tax, doc stamps on the note, and the mortgage brokerage fee. If the property appraises for the contract price, will the VA guarantee this loan?
Select one:
a. Yes, since the VA now allows the veteran to pay all closing costs
b. No, because the veteran is not permitted to pay closing costs
c. Yes, provided the loan can be sold in the secondary market
d. No, because the veteran is not permitted to pay commissions

Answer 7

No, because the veteran is not permitted to pay commissions

Question 8

Broker Brian is managing Top Notch Apartment Complex. As part of the lease agreement with each tenant, Brian collects a $500 deposit when the contract is signed. In which of the following situations can the broker use the deposit for damages?
Select one:
a. When notice is provided to the former tenant within 30 days of lease termination
b. When a 15-day notice is given by certified mail to the tenant upon termination of the lease
c. Never, the last month’s rent must always be refunded
d. Never, the last month’s rent can only be used for rent

Answer 8

When notice is provided to the former tenant within 30 days of lease termination

Question 9

The sale or purchase of securities by the Federal Reserve System (FRS) involves:
Select one:
a. Liquidity adjustment 
b. Changing the discount rate 
c. Reserve requirements of member banks 
d. Its open market operations

Answer 9

Its open market operations

Question 10

What is the required housing expense ratio for a conventional loan?
Select one:
a. 43% 
b. 36% 
c. 31% 
d. 28%

Answer 10

28%