Quiz 21: Enhancing Value Through Ongoing Management
Business
Q 1Q 1
An investor purchased a property with an equity investment of $100,000 and an $800,000 mortgage. She has held the property for five years, and the mortgage now has a balance of $750,000. The market value of her property is estimated to be $950,000. What is her current equity investment
Free
Essay
Her current equity investment in the property is $200,000, which is equal to the current market value of the property ($950,000) minus the current loan balance ($750,000).
Q 2Q 2
The Institute of Real Estate Management (IREM) awards which of the following designations
A) REM.
B) CPM.
C) MAI.
D) RPA.
Free
Multiple Choice
The correct answer is option (b) CPM. To earn the designation, property managers must have a minimum of five years of full-time decision-making activity in real estate management, take numerous educational courses, and pass a rigorous exam. In addition, CPMs must agree to continuous education to keep their certifications current and abide by the highest standards of professional ethics.
Q 3Q 3
What should be included as rehabilitation costs to be matched by value added after rehabilitation
Free
Essay
An improvement, such as rehabilitation, should be undertaken only if the value added to the property exceeds the cost of improvements, which include material, labor, the contractor's profit, architect's fees, and an allowance for contingencies. If the rehab work prevented the owner from renting all or part of the structure for some period of time, the present value of the lost net rental income should be included as a cost.
Q 4Q 4
A contractual relationship in which an individual must act in the best interests of a principal when dealing with a third party is termed:
A) An agency relationship.
B) A lease arrangement.
C) A tenant-landlord relationship.
D) A joint venture contractual arrangement.
Free
Multiple Choice
Q 5Q 5
In what ways are the maintenance and repair decision and the rehabilitation decision similar How do they differ
Free
Essay
Q 6Q 6
The requirement of a real estate property manager to act in the best interests of the landlord when dealing with a tenant is termed:
A) An associate responsibility.
B) Due process.
C) A fiduciary responsibility.
D) An implied responsibility of the employment contract.
Free
Multiple Choice
Q 7Q 7
What factors can change after rehabilitation of a property to produce a higher "after" rehabilitation value than "before" value
Free
Essay
Q 8Q 8
Which of these is not typically a responsibility of a property manager
A) Marketing and leasing.
B) Tenant relations.
C) Maintenance programs.
D) Income tax analysis.
Free
Multiple Choice
Free
Essay
Q 10Q 10
Remodeling and rehabilitation:
A) Are preventive measures undertaken to prevent a loss in value.
B) Are most likely categorized as operating expenses.
C) Are expected to add value to the property if undertaken.
D) Can usually be undertaken by the property manager without consulting the owner or asset manager.
Free
Multiple Choice
Free
Essay
Q 12Q 12
Both the owner and the manager may be better off if property management compensation were based on a percentage of the property's:
A) Potential gross income.
B) Effective gross income.
C) Net operating income.
D) Market value.
Free
Multiple Choice
Free
Essay
Q 14Q 14
The following are necessary for a lease to be valid, except:
A) Consideration.
B) Written leases, if longer than one year, in most states.
C) Tenant's contact phone number, or address, in the event of an emergency.
D) Statements to the effect that the tenant agrees to lease the property for a specified period and that the owner and the tenant agree to the terms of the rent.
Free
Multiple Choice
Q 15Q 15
How is the financial compensation for property managers usually determined What "agency" problem does this seem to create
Free
Essay
Q 16Q 16
The asset manager is generally NOT responsible for:
A) Finding properties for the investor/principal.
B) Arranging financing for properties.
C) Making maintenance decisions.
D) Overseeing the due-diligence of the purchase for the investor/principal.
Free
Multiple Choice
Q 17Q 17
Why is the tenant mix critically important to the performance of shopping center investments
Free
Essay
Q 18Q 18
Demolition of an existing property on an urban site will likely occur:
A) After the building has been abandoned for a reasonable period of time.
B) When the highest and best use of the property is a taxpayer use, such as a parking lot or recreational park.
C) When the site value, assuming a new use, exceeds the value of the site under its existing use, plus the cost of demolition.
D) When the site value, under its existing use, exceeds the cost of demolition.
Free
Multiple Choice
Q 19Q 19
In the real estate asset management/investment advisory business, why has performance-based management replaced, or at least supplemented, the "traditional" scheme for compensating some asset managers
Free
Essay
Q 20Q 20
For non-real estate corporations, which of the following is not a potential advantage of a real estate sale-leaseback
A) The firm can convert an illiquid asset into cash.
B) More of the firm's capital can be invested in its core business.
C) The firm benefits from property appreciation that occurs after the sale-leaseback.
D) The firm may reduce its overall financing costs.
Free
Multiple Choice
Q 21Q 21
In the context of asset management agreements in the private commercial real estate industry, what is a benchmark index What is the most typical benchmark index
Free
Essay
Q 22Q 22
With respect to complying with applicable landlord-tenant laws, would you rather be managing an apartment complex or an office building Explain.
Free
Essay