Which kind of industrial property is typically located away from residential and central commercial areas?
Heavy industrial
Light manufacturing
Loft/warehouse buildings
Manufacturing
A barber polls his customers and learns that they tend to come from less than a mile away. That’s probably because the barbershop is in which type of location?
Factory outlet mall
Neighborhood center
Regional shopping center
Strip mall
Which of the following belongs in the commercial category referred to as retail?
A gift shop in a shopping center
A hotel
A manufacturing plant
A warehouse
John works in an industrial park on the outside of town. He loves his job because he doesn’t have to commute, and he gets to drive a forklift all day. The company he works for stores its inventory in this off-site location prior to shipping it out to customers. What kind of industrial space does John work in?
Heavy industrial
Light manufacturing
Loft/warehouse building
Manufacturing
A steel plant is an example of which commercial property category?
Leisure
Manufacturing
Retail
Sporting
Which type of retail space has an anchor store and commonly has approximately three miles of trade space, often has service businesses, such as dry cleaners, hair salons, and convenience stores?
Factory outlet
Mall
Neighborhood center
Strip mall
Trent works for a well-known motorcycle manufacturer in its powertrain operations facility. He loves being around all of the heavy machinery and seeing the bikes come off of the production line. What type of space does Trent work in?
Heavy industrial
Light manufacturing
Loft/warehouse buildings
Retail
Congratulations! The crowd funding worked. Now you can start manufacturing your own line of yoga clothing. But first, you need a location to do all of that sewing. Which building would you select?
Heavy industrial
Light manufacturing
Residential
Retail outlet
Which type of retail space usually has businesses offering general merchandise and fashion and is typically enclosed with inward-facing stores connected by a common walkway?
Factory outlet
Mall
Neighborhood center
Strip mall
Which type of industrial property is often converted into living spaces?
Heavy industrial
Light manufacturing
Loft/warehouse buildings
Manufacturing
Anthony lives in a two-story apartment building. What type of building is it?
Commercial
Freehold
Low-rise
Retail
Which of the following describes a high-rise building?
40 or more stories tall
Always equipped with elevators
Four to nine stories tall
Multi-family residential
Which of these is NOT considered a residential property?
A condominium unit
A hotel with fewer than 20 rooms
A single-family home used for rental income
A triplex
Since the birth of their first child, Charlotte and Darryl have spent far more time at the drug store than they care to admit. Luckily, it’s close to their house in a small area of retail stores arranged in an “L” shape. What kind of retail space does this describe?
Factory outlet
Mall
Neighborhood center
Strip mall
A duplex is what type of property?
Commercial
Leisure
Residential
Single-family residential
Which of the following is an example of a residential property?
Condo
Hotel
Motel
Office building
Why may agricultural land be a good investment?
Bargains are easily found.
Farming is relatively easy.
It is the most liquid of investment properties.
There is an increasing global demand for food.
Why are residential properties popular with investors?
Because they’re rare, and therefore valuable.
They need somewhere to live.
They’re always in demand.
They require no down payment.
In one commercial space, several businesses are arranged in a neat row. Customers enjoy the open-air walkways when they visit. In which type of commercial space are these businesses likely located?
Office building
Office park
Regional shopping center
Strip mall
In which commercial category are raw materials converted into useful objects?
Healthcare
Leisure
Manufacturing
Retail
Julie and Tim have inherited some money. They have decided to purchase some agricultural land as an investment. Which of the following is true?
Agricultural land is relatively liquid.
Bargains are easily found.
They can expect an immediate return on their investment.
They may have a long holding period.
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What is a leasehold mortgage?
It allows the lender to increase the rate on the mortgage after the borrower pays off a specific percentage of the loan.
It allows the lender to participate in the project by investing funds and realizing a return.
It is a long-term estate for years where the interest in the estate is pledged to the lender instead of the property.
It uses the equity of one property to fund the purchase of another and is a common investment strategy.
Andrea, a commercial developer, is planning to build an apartment complex on a lot in Miami and is using the land, pledged to the lender as an estate for years, as collateral for the loan. What type of mortgage is this?
Fee simple
Freehold
Leasehold
Participation
To arrive at annual debt service cost, divide ______ by the debt coverage ratio.
Annual NOI
Loan factor
Maximum equity
Maximum loan
Luther is analyzing an investment property. During his analysis, he looks at environmental sensitivity, political climate, the potential for a development moratorium, economic downturns, etc. What is Luther demonstrating?
That financing is important
That real estate investments have too many risks
That risks involved with real estate investments need to be analyzed
That there are too many factors to consider when investing in real estate
You have a new investor client who wants to purchase a high-rise downtown. Which of the following items related to financing is the LEAST important for the two of you to consider?
Possible refinancing strategies
The interest rate of the financing
The operating hours of the financial institution you’ll use
What type of financing is available
Why is 2.5 a better debt service ratio than 1.8?
A debt coverage ration of less than two indicates negative cash flow.
A debt service ratio of 1.8 indicates that there is only enough income available to pay 80% of the annual mortgage payments
Lenders won’t consider debt coverage rations of less than 2.0.
The higher the debt service ratio, the more income the investor will have to cover the debt, and therefore, the less risk.
What is a participation mortgage?
It allows the lender to increase the rate on the mortgage after the borrower pays off a specific percentage of the loan.
It allows the lender to participate in the project by investing funds and realizing a return.
It is a long-term estate for years pledged to the lender instead of the property.
It uses the equity of one property to fund the purchase of another and is a common investment strategy.
What do you do to determine debt coverage ratio?
Divide debt service by gross income
Divide net income by debt service
Subtract expenses from income
Subtract income from expenses
Flynt has a loan for a shopping center and is required to pay not only his mortgage payment but a percentage of the income he earns from the shops. What kind of a mortgage is this?
Fee simple
Freehold
Leasehold
Participation
The percentage of the amount invested that the investor receives back is called ______.
After-tax cash flow
Capitalization
Leverage
Rate of return
Gary, your investor client, has an annual net income of $50,000. His annual debt service is $12,500. What is his debt coverage ratio?
.004
0.25
1.4
4.0