UNIT 12 Flashcards
What are the subcategories of commercial real estate?
Office buildings, retail space, and hotels/motels
Define mixed-use development.
When the uses for one property are combined
What is included in recreational real estate?
Country clubs, marinas, sports complexes, parks, forests, and campgrounds
What makes institutional real estate different from other types?
It has a unique use to the persons who own and use it, such as a government agency, a church, a hospital, or a university and usually would not be easily tailored to other uses.
List three reasons why a business might prefer leasing over purchasing property.
Leasing is more cost effective if a tenant needs less space than what is currently available.
Leasing is a more flexible option if an owner decides to move to a different location.
Ownership involves operation, maintenance, and repair of the building which takes focus away from the owner’s primary business activities.
What factors affect net operating income?
Market rent
Vacancy
Expenses
Define market rent.
The price that a specific type of property is likely to draw under the current market conditions
What kinds of expenses are normally associated with income properties?
Variable expenses and fixed expenses
Why do retail leases often contain provisions that affect how tenants may, or may not operate their businesses?
Because most retailers will be operating their businesses close to other retailers.
Why might tenants leasing industrial property prefer to have very long-term leases?
They might have this preference if they are installing expensive equipment that would be very difficult to move.
What might you find in a farming lease that you wouldn’t see in other leases?
Most farming leases need to address the issue of environmental concerns.
List two advantages of investing in nonresidential property. (See page 20 for other correct answers.)
Unlike apartment properties, there is very little risk of any kind of rent control.
Business tenants are generally easier to deal with than apartment house tenants.
…………….. is the term used for the net income produced by a specific property after all expenses have been deducted from the gross receipts.
Net Operating Income or NOI
…………….. is the term used for the net income produced by a specific property after all expenses have been deducted from the gross receipts.
Net Operating Income or NOI
Which of the following strategies would require a business to outlay the most amount of capital for building space?
Purchasing a building
