1/2 Unit 21: Investment & Commercial Properties

Which of the following is not a major consideration by real estate investors when evaluating a property?

• Risk

• Liquidity

• Comps

• Leverage

Vandalism would be considered which kind of risk?

• Dynamic risk

• Capital risk

• Financial risk

• Static risk

You’re an investor considering purchasing a property. The prospectus and pro forma statements helped you determine the NOI of $100,000. You require a return rate of 10%. What purchase price would you be willing to pay for the property?

• 10,000,000

• 1,000,000

• 100,000

• 10,000

You’re an investor considering purchasing a property. The seller is asking for $2,000,000 and you require a 10% return rate on your investments. Before performing your financial analysis, what NOI would you require the property to have to consider purchasing it?

• 2,000,000

• 200,000

• 20,000,000

• 20,000

Which of the following formulas is INCORRECT?

• Income = Rate x Value

• Rate = Income/Value

• Value = Income x Rate

• Value = Income/Rate

The formula for net operating income is...

• = Potential gross income - Vacancy and Collections loss

• = Effective gross income - Operating expenses

• = Before-tax cash flow - Income tax

• = Taxable Income x Marginal rate

Which of the following is a type of lease where the lessee pays the lessor a minimum base rent plus a portion of the merchant’s sales over a natural break even or natural break?

• Net Lease

• Gross Lease

• Percentage Lease

• Loft Lease

In which of the following leases does the tenant have to pay some or all of property taxes and operational costs. Choose the best answer.

• Gross lease

• Net lease

• Percentage lease

• Loft lease

Which of the following is the difference between the rentable area and the actual usable interior space measurement?

• Rentable Area

• Usable Area

• Loss Factor

• Add-on Factors

Which of the following is the most useful area measurement for tenants?

• Rentable Area

• Usable Area

• Common Area

• Carpetable Area