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ree 3043 exam 4.
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Exam of 8 pages for the course REE 4103 at REE 4103 (ree 3043 exam 4.)
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ree 3043 exam 4A contractual relationship in which an individual must act in the best interests of a
principal when dealing with a third party is termed: - ANS-An agency relationship
A developer's selection of an architect is a vital step in the development process as the
architect fulfills a number of important roles throughout the life of the project. As
compensation for contributions in the design phase, the architect is often given a
percentage of the construction cost. For moderately complex designs, the average
compensation will be: - ANS-3 to 7%
A lease in which the tenant pays a rent based in part on the sales of the tenant's
business is known as a: - ANS-Percentage Lease
A method of construction where the actual construction begins before the design is
finished is known as: - ANS-Fast-track
All of the following are valuable in facilitating the development permitting process
except: All of the following are valuable in facilitating the development permitting
process except: - ANS-Establishing the strength of your legal position early in the
process
As a tenant, you wish to turn over all rights and responsibilities of your unexpired lease
term to a new tenant. If allowed to do so by the owner, you are: - ANS-Assigning your
leasehold interest
Both owners and managers must carefully designate their responsibilities in the
management agreement. In a management agreement, all of the following would
typically be responsibilities of the property manager EXCEPT: - ANS-Liability
Both the owner and the manager may be better off if property management
compensation were based on a percentage of the property's: - ANS-Net operating
income
Congressional legislation has repeatedly altered the period of time over which rental
real estate may be depreciated. Currently, residential income producing property (e.g.
apartments) may be depreciated over no less than: - ANS-27 ½ years
, Current tax law allows investors to take tax credits for the cost of renovating or
rehabilitating older or historic structures and for the construction or rehabilitation of
qualified low-income housing. Which of the following statements regarding tax credits is
true? - ANS-A $1 tax credit reduces the investor's tax liability by $1.
Demolition of an existing property on an urban site will likely occur:Demolition of an
existing property on an urban site will likely occur: - ANS-When the site value, assuming
a new use, exceeds the value of the site under its existing use, plus the cost of
demolition
Despite the magnitude of their real estate holdings, many non-real estate corporations
have historically expended little effort to manage these assets effectively. Recently, the
development of which of the following markets has helped to quell concerns related to
this issue? - ANS-Sale-leaseback
Existing leases: - ANS-Must be considered more carefully when valuing a multi-tenant
office building than valuing an apartment complex
For most commercial property types, lease lengths can vary considerably. Therefore,
both parties must tradeoff between the advantages and disadvantages associated with
particular leasing terms. Owners may prefer longer leases for all of the following
reasons EXCEPT: - ANS-Gain flexibility
For non-real estate corporations, which of the following is not a potential advantage of a
real estate sale-leaseback? - ANS-The firm benefits from property appreciation that
occurs after the sale-leaseback
For tax purposes, a substantial real property improvement (CAPX) made after the initial
purchase is: - ANS-Treated like a separate building
Homeowners receive preferential tax treatment under current federal income tax laws.
The benefits that homeowners receive from this treatment include all of the following
EXCEPT: - ANS-Losses on the sale of a personal residence can be deducted from
federal taxable income
If an investor is a "dealer" with respect to certain real estate, that real estate is classified
(by the IRS) as being held: - ANS-For sale to others
If the investor is in the 33% income tax bracket, how much will a tax credit of $2,000
save the investor in taxes? - ANS-$2,000
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