UGA REAL 400- EXAM 4 Questions And Answers Rated A+ New Update Assured Satisfaction
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Course
UGA REAL 400
Institution
UGA REAL 400
What is investment value? - maximum the buyer would be willing to pay and the minimum the
seller would be willing to accept
Due to the large size of typical RE investments, investors almost always..... - pool their equity
capital
What are some ways to pool equity? - -General partnership
-Limit...
UGA REAL 400- EXAM 4
What is investment value? - maximum the buyer would be willing to pay and the minimum the
seller would be willing to accept
Due to the large size of typical RE investments, investors almost always..... - pool their equity
capital
What are some ways to pool equity? - -General partnership
-Limited partnership
-C corporation
-S corporation
-Limited liability company (LLC)
-Tenancy-in-common
-REIT
What are the advantages of pooling equity? - -allows investors to purchase an interest in larger
properties
-diversification of portfolio
-economies of sale in acquisitions, management and disposition
-access to cheaper debt capital
-expertise of management team hired by syndicator/ organizer
What are disadvantages of pooling equity - -often must relinquish management control to active
manager
-must compensate sponsor with fees, salary, and/or disproportionate share of equity ownership
What drives Choice of Ownership Form? - 1. Federal income tax issues/rules
2. Desire of investors for limited liability
3. Management control issues
4. Ability to access debt & additional equity capital
, 5. Ability to share risk with other investors
6. Ability of investors to dispose of their interests
Direct Investment - -gives the individual & institutional investors complete control
-but...investor must supply the expertise
-no liquidity
-as size of investor's portfolio increase, its easier to diversify risk, create liquidity across assets, retain in-
house experts or hire consultants
What is the estimated market value of investable commercial real estate? - 12.6 trillion
General Partnership - -treated as conduits for tax purposes (don't face "double taxation")
-easily created
-partners make all operating decisions
- all partners have unlimited liability (which makes it uncommon)
Limited Partnership (LP) - -must have at least one general and one limited partner
-treated as conduits for tax purposes
-limited partners can cap their liability to their investment amount, while general partners face unlimited
liability
-rely on the general partner to make all decisions
C Corporation - -most common type of corporation
-is a legal business entity that offers limited liability to all of its owners, who are called stockholders
-pays through dividends
-provides limited liability to shareholders
-may get double taxed
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