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REE 4103 Practice Questions
REE 4103 Practice Questions
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REE 4103 Practice QuestionsA ___________ would have the lowest ratio of operating expenses to gross income
incurred by landlord - ANS-Retail and Industrial properties
A gross lease is one that: - ANS-the landlord pays all the operating expenses of the
property
A lease clause that limits the expenses of the landlord is termed a - ANS-
A lease on an 8000 square foot industrial building, where the rent is specified as
$3,500/month for a 5 year term with level income throughout the least term. When the
lease was negotiated, the tenant received free rent for the first month of each year as a
concession. What is the effective rent per square foot per year? - ANS-4.81
A lease which provides for rental changes annually tied to the CPI is what kind of lease?
- ANS-Index Lease
A lease which requires the landlord and tenant to arbitrate the amount of lease upon the
tenant exercising an extension option is what type of lease? - ANS-Reevalution
A lease with the following annual payments: Year 1: $10,000 Year 2: $12,000 Year 3:
$14,000 Year 4: $16,000 would be called what type of lease? - ANS-Step Up lease
A property forecasted to produce $55,000 of gross income, and which sells for
$475,000 is said to have sold at a GIM of? - ANS-8.63
A property sold for $555,000. The buyer anticipated the PGI would be $93,000, vacancy
would be 5% and expenses would be %53 of EGI in the year after the purchase. What
is the overall cap rate? - ANS-7.48
A reconstructed operating statement for an owner operated property should include: -
ANS-• Vacancy and Collection Loss
• Effective Gross Income
• Operating Expenses
• Fixed Expenses
• Variable Expenses
• Replacement Allowance
• Total Operating Expenses
, • Net Operating Income
• Additional Calculations
• Mortgage debt service, Equity Dividend, Expense & Income Ratio
A rent survey reveals that apartment buildings offering one-bedroom units have a
considerably higher occupancy factor than those with two bedroom units. If the subject
property includes only units with two bedrooms, the appraisal should probably project: -
ANS-a higher vacancy factor
A revaluation lease - ANS-provides for periodic rent adjustments based on the market
rental rate of the space
A tenant who has an Exclusive Use Clause with a landlord, where the landlord later
allows a competing tenant in the same shopping center may: - ANS-sue
All are used in the valuation of income producing property except: - ANS-income taxes
All of the following are excluded from the reconstructed operating statement except -
ANS---
All of the following lease provisions are advantageous to the lessee except -
ANS-Escalation clause
All of the following relate to the rent level or payment schedule of a lease except: -
ANS----
An allowance for vacancy and collection loss is estimated as a percentage of: -
ANS-Potential Gross Income
Any required adjustments in the division of expenses in comparable properties should -
ANS----
At the time of an appraisal a warehouse is leased to a quality tenant for 9.00/square
foot. The rent obtainable in the market is 6.00/square foot. The lease with the landlord is
termed a: - ANS-negative leasehold
Capitalization is employed in the: - ANS-Income approach- income properties
EGI is income after an allowance for - ANS-Vacancy and Collection Loss
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