Exam (elaborations)
REE 4103 Exam 2|Questions with Correct Answers| Verified
- Course
- Institution
REE 4103 Exam 2|Questions with Correct Answers| Verified
[Show more]
Seller
Follow
Content preview
REE 4103 Exam 2|Questions with CorrectAnswers| Verified
A lease on a 8,000 square foot industrial building, where the rent is specified as $3,500/month,
for a 5-year term with level income throughout the lease 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? - ANSWER 3,500 * 11 months = 38,500/yr 38,500 /
8,000 sq ft. = 4.8
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 at the same time is $6.00/square foot. The lease with the
landlord is termed a: - ANSWER negative leasehold
Rent pursuant to a lease that is paid over and above the guaranteed minimum based on gross
sales of a retail tenant is called: - ANSWER overage rent (excess)
The level of sales at which the percentage rent in a lease exactly equals the base rent is called
the? - ANSWER natural breakpoint
The level of sales at which the percentage clause in a lease is activated is called the? - ANSWER
breakpoint
The amount of net operating income that remains after debt service is paid is called: - ANSWER
equity dividend
The lump-sum benefit an investor receives upon termination of an investment is called: -
ANSWER reversion
,Operating expenses used for valuation purposes generally do not include: -
ANSWER depreciation expense
Operating expenses that generally do not vary with occupancy and have to be paid whether
the property is occupied or vacant are called: - ANSWER fixed expenses
Expenses that generally vary with the level of occupancy or the extent of services provided
are called: - ANSWER variable expenses
Full recovery of amount invested is the: - ANSWER return of investment
Generally, higher overall cap rates are associated with: - ANSWER less desirable properties
A revaluation lease - ANSWER Provides for periodic rent adjustments based on the
market rental rate of the space
Potential gross income is - ANSWER amount that would be received from rental properties if
all units were occupied all year
A property sold for $555,000. The buyer anticipated the potential gross income would be
$93,000, the vacancy would be 5%, and expenses would be 53% of EGI in the year after
the purchase. What is the overall capitalization rate (RO)? - ANSWER R = NIR / EGIM
NIR=1-OER=1-.53=.47
EGI = PGI - (V+C) = 93,000 - 4,650 = 88,350
V = EGIM * EGI
555,000 = EGIM * 88,350
EGIM = 6.28
R = NIR / EGIM = ..28 = .0748 or 7.48%
, An allowance for vacancy and collection loss is estimated as a percentage of: - ANSWER
potential gross income
The anticipated income that remains after deducting all operating expenses from effective
gross income but before mortgage debt service is: - ANSWER net operating income
A triple-net (absolute net) lease - ANSWER would have the lowest ratio of operating
expenses to gross income incurred by the landlord.
The operating expense ratio for income property is typically: - ANSWER complement of the
net income ratio
In determining income and expenses the first step is - ANSWER a lease and rental analysis
Effective gross income is income after an allowance for: - ANSWER vacancy rates
In a high rise 100-unit apartment building there is a basement laundry area that brings in
$100 monthly from the concessionaire. The laundry income is - ANSWER Added to before-tax
cash flow
In an appraisal of income property, which of the following items should be excluded from
the expense statement? - ANSWER depreciation
Overage rent is the: - ANSWER percentage rent over the guaranteed
Painting and redecorating of an apartment unit is a(n): - ANSWER operating expenses
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller KenAli. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
81989 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now