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RE Practice CHAPTER 13: Appraisal of Property/Property Valuation WITH - correct answers
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RE Practice CHAPTER 13: Appraisal of Property/Property Valuation WITH - correct answers
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RE Practice CHAPTER 13: Appraisal of Property/PropertyValuation WITH - correct answers
A builder buys all the lots of a street abutting a neighborhood and
builds luxury homes. Property values in the neighborhood increase;
what principle applies?
- The principle of regression applies.
- The principle of change applies.
- The principle of change applies.
- The principle of progression applies.
The principle of progression applies.
A builder purchases land for $30,000. It costs him $50,000 for materials
to build a home. The cost of labor is $30,000. Loan costs came up to
$10,000. Fees and taxes were $10,000. If he sells the home for
$130,000 will he make a profit?
- Yes because the buyer will pay for the land
- Yes, because the buyer will pay the taxes
,- Yes, because the buyer will pay loan costs
- No, he will break even.
$30,000 Land Purchase
- $50,000 building materials = -$20,000
- $30,000 labor = - $50,000
- $10,000 financing costs = -$60,000
- $10,000 fees and taxes = $70,000
+ $130,000 sale = $60,000
No, he will break even.
A large apartment complex collects parking fees, pet fees, and laundry
fees. Are these included in gross operating income?
- Yes, all fees along with rental income is taken into consideration.
- Parking fees and laundry fees count, pet fees don't count.
- No, only actual income from rent is included.
- Pet fees and laundry fees count, parking fees don't.
Yes, all fees along with rental income is taken into consideration.
, A property's anticipated income and expenses can be found in which of
the following documents?
- Executive summary
- Anticipated yield analysis
- Underwriting summary
- Pro-forma
Pro-forma
An investor is looking to purchase a property at an 8% cap rate. What
would be the purchase price if the property has an NOI of
$880,000?
- $11,000,000 (Dollars)
- $8,800,000 (Dollars)
- $10,000,000 (Dollars)
- $4,400,000 (Dollars)
CAP Rate = Net Operating Income/Purchase Price
$11,000,000 (Dollars)
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