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What is Real Estate? > Types of Real Estate > Flashcards

Types of Real Estate Flashcards

1
Q

What are Manufactured homes

A

Built of site and is capable of being moved from place to place. (called Mobile Homes)

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2
Q

Are Manufactured homes real or personal property

A

It can be both; however, once an affidavit of affixture has been filed in the county where the home is affixed in AZ, the document makes the home’s transition from personal to real property official

If the owner goes on to sell the home separately from the land, it has to be retitled with the DMV.

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3
Q

Property Taxes on Agricultural Property’s

A

the on-site residence of the owner of an agricultural enterprise may not be considered agricultural real estate. Rather, it’s residential real estate. That “on-site residence” would include the owner’s home and all related residential structures

if the agricultural real estate contains housing facilities for employees of the agricultural business, however, that would be included in the property tax assessment

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4
Q

All common interest ownership properties are considered subdivisions and are regulated by state law.

A

True

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5
Q

What is a Condominium

A

or condos are property in which each owner has a separate interest in their own unit and undivided interest in the common areas.

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6
Q

Air rights and condos

A

only own the inside (or airspace)of their residential unit. (condos are called walls in)

Condo owners do not own the land on which their unit is located

By owning air lots, condo owners have Horizontal Regime. They don’t own land or air rights above or below them.

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7
Q

What are common elements

A

portions of a shared ownership property not controlled by any one owner or tenant (pools hallways in a condo)

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8
Q

What are limited common elements

A

these are owned by everyone, as with other common elements, but are only used by a few owners or even one owner. A common example of this is a designated parking space.

Limited common elements have restricted access but are still jointly owned.

if a limited common element needed repairs, everyone in the building would pay.

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9
Q

Ownership of Condos

A

fee simple absolute ownership interest in the interior of their individual units.

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10
Q

ownership of common elements in a condo

A

owners possess the common elements as tenants in common, which means that they have an undivident interest in them, but can own them in unequal shares.

Everyone has the equal right to use all of the common elements, regardless of their proportional share of the ownership

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11
Q

maintenance fees and HOA condos

A

HOA charges monthly maintenance fees for future repairs for condos

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12
Q

what is covenants, conditions and restriction
(CC and Rs) known as deed restrictions or restrictive covenants

A

rules attached to the property by a developer, the purposes is to keep the development in good condition and preserve its value

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13
Q

What does Declaration and Public Disclosure Report do

A

aka master deed. The declaration converts the development property’s single deed into individual condominium estates and common areas.

Of note, the declaration needs to be approved by the state.

Furthermore, the developer of a condominium project must also obtain a Public disclosure Reports in order to sell individual units.

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14
Q

If buyer is purchasing a condo what must be disclosed to the buyer

A

must receive a copy of the condo development’s bylaws and CC and R before purchasing.

The party that is responsible for delivering this info is

if there are < then 50 units the owner is responsible
if there is >50 the owner association must provide the bylawas and cc and r

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15
Q

what is cooperatives?

A

building owned by a corporation where the residents are shareholders in the corporation. Each shareholder has the right to use common areas.

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16
Q

Each shareholder also has what for their particular unit, which is a long-term and exclusive lease given to residents and stock owners of a cooperative

A

proprietary lease

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17
Q

do you own the property in co-op

A

is a unique type of ownership because rather than owning the unit itself, owners have shares of stock in the corporation or cooperative. so co-op owners live in the apartments they lease, but they don’t actually own them

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18
Q

does arizona residential landlord and tenant act apply to tenants of co-ops

A

Yes

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19
Q

maintenance fees and co-op

A

co-op owners pay a monthly maintenance fee. Each co-op tenant will pay a pro rata (proportionate) share of the whole building’s expenses

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20
Q

are co-ops jointly owned

A

yes

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21
Q

what if co-op want to do renovation on their units

A

usually have to get approval from the co-op board. Co-op boards have much more power than condo boards do since the whole building is jointly owned.

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22
Q

what form of ownership can you have with co-op

A

fee simple
leasehold

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23
Q

What do cooperative members own?

A

Shares of the corporation that owns the buildings

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24
Q

what must happen to purchase shares in a co-op

A

prospective buyers must be approved by the co-op’s board

They buyer provides board package, a packet of financial and personal information to the board and if the board package is accepted, the potential purchaser will have a board interview

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25
Q

What are condops

A

are combination of condos and co-ops in the same building

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26
Q

do condops have both residential and commercial

A

yes

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27
Q

are some properties owned as condominiums and some as cooperatives

A

yes

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28
Q

Example of condop

A

on the ground there may be business and on top level might be residential

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29
Q

what is planned unit development

A

is a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations.

Recreational facilities may be co-owned by PUD lot owners as tenants in common

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30
Q

how are puds different from condos

A

Puds can consist of attached townhouses or unattached houses, but they are differentiated from condos by the fact that a buyer purchases both the structure itself and the land it sits on. Owners have vertical rights that include their roof and the land under the house

with condos, common elements are shared

unlike condos, PUB ownership includes the land beneath the dwelling

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31
Q

private and shared ownership with puds and condos

A

PUD owners may exclusively own their own roofs, garages, and private yards or patios

what’s privately owned and what is shared will be outlined by the developer as part of the offering documents

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32
Q

what are the two forms of ownership for pods

A

fee simple interest ownership of the individual unit (including the land beneath it)

Tenancy in common ownership of all common elements

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33
Q

Do PUDS have rules and restrictions

A

yes, puds can come with cc and r or deed restrictions, that are attached to each home’s deed. These deed restrictions are enforced by the HOA

34
Q

Are townhomes considered PUDS

A

YES

35
Q

Buyers of units in PUDs are entitled to receive certain info about the PUD.

A

The bylaws and rules of the association
The declaration of CC&Rs
A dated statement that includes:
Address and phone number of principal contact for the homeowners association
Cost of regular and special assessments, including those that are currently due from the seller
Information on what is covered by the association’s insurance
The total dollar amount of the association’s reserves
Any relevant information about alterations or improvements to the unit
Any case names or numbers of pending litigation involving the premises or the HOA
HOA’s current operating budget, most recent annual financial report, and any recent reserve studies
he buyer will sign a statement showing they read and understood the rules and documents.

36
Q

What is a timeshare

A

is a form of co-ownership where each owner has the use of the property at different prescribed period of time (called interval ownership)

37
Q

true or false
each timeshare unit is considered and estate or interest in real property separate and distinct from all other timeshare estates in the same unit or any other unit. Therefore, estates may be separately conveyed and encumbered.

A

True

38
Q

Timeshare estate

A

a right of occupancy in a timeshare project, which is coupled with an estate in a real property

39
Q

Timeshare interval

A

a timeshare estate, a timeshare use or a timeshare period

40
Q

Timeshare project

A

a project in which a purchaser receives the right to the recurrent, exclusive use or a segment of real property annually or on some other periodic basis

41
Q

Timeshare use

A

license or contractual or membership right of occupancy in a timeshare project that is not coupled with an estate in the real property

42
Q

What are the three types of ownerships in timeshare

A

Tenant-in-common ownership
Interval ownership
Vacation ownership

43
Q

Tenant in common ownership

A

the buyer owns the unit as a tenant in common along with the other owners. The time period in which each buyer can use the unit is arranged in a single occupancy agreement

44
Q

interval ownership

A

The life expectancy of the building is taken into consideration. Buyers are granted an estate for years with a deed, title, and right to occupy the unit for a certain time each year

45
Q

Vacation ownership

A

The buyer has a contract that grants them a license to use the property for a specified time period. Fee ownership is actually held by the developer. In a vacation timeshare, the buyer pays a one-time purchase price and annual maintenance fees

46
Q

Public reports and timeshares

A

Timeshare developers must file a public timeshare reports with the ADRE if they are planning to sell 12 or more intervals of time
it’s up to commissioner of the Department to approve the report

Public report is given to to all interested buyers

47
Q

What does timeshare consumer protection reports contains

A

Developers must provide buyers with copies of their purchase agreements
Must include duration and extent of the buyer’s financial commitment
and right of rescission for the buyer

48
Q

What is right of rescission in AZ

A

Right to cancel an agreement for any reason
Timeshare buyers are allowed to cancel their timeshare purchase agreement within 10 days of executing the contract.
if buyer acts on this right they must send a written notice to the developer by midnight of the tenth calendar day of signing the contract
Buyer will be released from the obligations of the contract and they will receive a timely refund of any fees paid

49
Q

How does Membership Camping Works

A

Individuals buy licenses to use a recreational facility. The buyers don’t actually buy an interest in real property. They just purchase the right to use the campground operator’s land.
Buyer may be able to sell their membership to another camper, but they cannot lend or rent their membership to others

50
Q

How is membership campground created

A

anyone who wishes to sell camping memberships must get the approval of the site from the commissioner of ADRE first.

The campground operator may own the land for which they sell licenses, but it’s not necessary. An operator who’s leasing the land can sell memberships to others as long as those agreements don’t extend beyond the life of the land lease

51
Q

How does cancellation work for camp grounds

A

The notices to cancel must be given before midnight on
the third business day after singing the contract, for AZ residents
the seventh calendar day after signing the contract, for non-residents

Within 30 days of recission, the campground operator must refund the buyer’s money

52
Q

Good scenario for co-op and puds condos

A

Here are some things you could have told them: 1. Condos are owned from the walls in fee simple, then you co-own the rest of the building/development with the other people in the building. Pros: low-maintenance, own your own unit, more flexibility and fewer rules than a co-op. Cons: less private space, you pay a maintenance fee, and you don’t get to pick your neighbors. 2. Co-op buyers invest in a corporation and get a proprietary lease. Pros: as part of the board, you choose your neighbors; they are often more affordable. Cons: less freedom to do what you want with the unit; if the building defaults on their loan, you lose your investment; not much private space; you pay a monthly maintenance fee (often a higher one than a condo). 3. PUD owners own their dwelling and the land below fee simple, and they are also co-owners of the common elements. Pros: amenities that you don’t have to do maintenance on, more private space, more financial stability, more freedom. Cons: HOA dues.

53
Q

Cash flow investors in real estate

A

when investors look for steady cash flow.
with the purchase or investment in property are looking for monetary return every month or on regular basis

54
Q

Long term return investors in real estate

A

return in capital further down the road with investment or purchase of property

are most likely interested in properties in up and coming areas that will be worth more as neighborhoods develop and change.

55
Q

short term

A

buying a fixer upper improving it and receiving a monetary return on it in a few months or a few years

56
Q

what is a real estate investment syndicate

A

is a group of investors that get together and combine resources to make investments they wouldn’t be able to make on their own. when this people purchase properties together they must follow the regulations of the US Securities and Exchange commissions.

57
Q

What is it called when forming syndicate

A

syndication

58
Q

Generally, a syndicate will ahve the following features

A

One sponsor or Syndicator/organizer, is the active manager of the endeavor

Group of investors investors are passive members, providing just their cash money

in most cases they will need to co-invest at least 5% of the equity requirement

Together
the sponsor builds the investment group and directs the project, charging the investor group fees for their work

59
Q

Syndicates =securities

A

Real estate syndicate investors are passive, which means they don’t have a say in the daily operations of the venture. The title to real property is not transferred initially to the investor. for these reason, a real estate investment syndicate is considered part of the securities world

A security is a financial instrument that has monetary value and can be exchanged for assets of the same type. Investors own shares or securities in the syndicate but have little more to do with it

As a securities -based business, the most common formal organization of a real estate investment syndicate is that of a limited partnership or limited liability company

60
Q

corporation and syndicates

A

ensures centralized management as well as limited liability for the investors. Even so, corporations are seldom used in modern syndicates because of their negative tax features

61
Q

General Partnerships and syndicates

A

avoids the double taxation issues you’d have with a c corp but the unlimited liability and lack of centralized management make it ill suited to ta syndicate

62
Q

Limited Partnership and syndicate

A

combines the tax advantages of a partnership with the centralized management and lability shield of a corporation

However, it still leaves the general partner personally liable for the business’s losses and iabilities

63
Q

LLC Syndicate

A

Permit the following

active participation in management

control by the members

limited lability similar to corporates shareholders

LLC will be taxed like a partnership as a passthrough entity rather than as a C corp taxed twice

LLC is the most common form for a syndicate to take

64
Q

What are the three phases of syndication

A

organization

Operation

Liquidation

65
Q

Organization

A

Planning
acquiring property
satisfying registration and discosure rules
marketing processes

66
Q

Operation

A

During the operation phase, the sponsor usually manages both the syndicate and the real property

67
Q

Liquidation

A

(completion) is the resale of the property

68
Q

What is joint venture

A

is a kind of syndicate that, instead of being an ongoing investing group, is a one off collaboration

Investors merge their finances together for one project or venture, and after the venture is finished, the investors part ways.

Typically, a joint venture will have one operating partner (like a general partner, but without the liability) who brings real estate expertise to the relationship, and one or several capital partners, or investors

69
Q

LLC

A

This is the most popular form for a joint venture to take

70
Q

Real Estate Investment Trust REIT

A

is a trust that invests in, owns, or acquires real property. It is owned by investors who share the trust’s profits according to shares.

REIT is a special kind of syndicate, organized as a trust, that owns (and typically operates) incom-producing real estate or real estate assets.

REIT are sort of like mutual funds for real estate investors buy shares in the trust, which they can sell at any time. The trust uses the money to purchase and manage property or mortgages

Many REITs are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly=traded REITs

71
Q

Pooled Funds

A

They provide a way for individual investors to earn a share of the income produced through commercials real estate without having to buy the properties.

REIT’s pool the resources of individual investors who would not be able to fund, get financing, or manage a real estate undertaking on their own.

72
Q

REITS and buying/managing property

A

the investor who chooses REIT donesn’t have to go out and find a house apartment complex, or a plot of land to buy nor do they have to worry about managing that property

73
Q

REIT and Illiquidity

A

REIT’s also overcome one of the biggest challenges with traditional real estate investing illiquidity. Many REITs are treaded on the stock market, and investors can buy and sell shares as easily as stocks.

74
Q

REIT and Risk

A

REIT allows investors to mitigate some risk by spreading their ownership interest across all the properties the REIT owns

75
Q

what are 3 categories of real estate

A

Equity
Mortgage
Hybrid REITs

76
Q

Equity REIT

A

Specialize in one type of real estate for example, houses or office buildings

77
Q

Mortgage REIT’s

A

make money by buying or originating loans or mortgage backed securities

78
Q

Hybrid REIT

A

invest in both income producing property and mortgages and mortgage based securities. Hybrid REIT’s more diversified holding hedge against the risk of investing in just one kind of thing.

79
Q

Requirements to qualify for REIT

A

the 100 shareholder test
need to have at least 100 shareholders at the biginning of their seecond taxable year

Q
the 5/50 test
five or fewer people can’t own more than 50% of the value of any single REITs stock. Many REITs limit how much stock a single share holder can own to prevent the REIT from violating this rule.

75% or more of REIT annul gross incom has to be from real estate

20% of the REIT gross income has to be from real estate sources or other income sources, including interest and dividends from no-real estate sources

no more than 5% of incomes may be from non-qualifying sources (service fees and other business unrelated to real estate.)

75% or more of REIT assets need to consist of real estate assets

REIT are not allowed to directly or indirectly own more than 10% of the voting securities of any corporation (except for other REIT, taxable REIT subsidiaries, or qualified REIT subsidiaries)

Reit are not allowe to won stock in a corporation if the stock value is more than 5% of the REIT assets

The value of the stock of all of a REIT taxable REIT subsidiaries cant comprise any more than 25% of the value of the REIT’ assets

The company needs to distribute 90% or more of its annual real estate income to investors. And 95% of gains must be distributed to investors every year. Any income that the REIT retains, it has to pay taxes on (just like other corporations).

They must have shares that are fully transferable.

They must be managed by a board of directors or trustees.

They must make a REIT election by filing an income tax return on Form 1120-REIT.

80
Q
A

What is Real Estate? (4 decks)

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