Question

1) Which is not typically part of property due diligence?

a) Review of asset’s historic financial and operational performance b) Audit of prior owner’s corporate financial statement c) Engineering study of the building’s physical condition d) Legal review of key documents

2) The bundle of rights of ownership typically includes which of the following rights:

(a) the right to pay back a mortgagee for the funds lent for the exclusive use of purchasing the property. (b) the right to use it, as one wishes, without regard to the rules of the lease (c) the right to sell it, after showing a satisfactory profit which may result as a condition of extended ownership. (d) the right to use it, subject to zoning requirement

3) Christopher Jones has been hired in February to do an appraisal on a 22-year old apartment building, with 16 units. Which approach will probably provide the most accurate valuation?

(A) Income approach (B) Cost approach (C) Replacement approach (D) Sales comparison approach

4) If a comparable, contemporary 3,200 SqFt house just sold for $298,000, what is the value of a similar house of 2,952 square feet?

(A) $274,890 (B) $320,000 (C) $298,000 (D) $93,120

5) The Langoon Family is taking over the mortgages on a condo that they are buying from the Hudsons because the mortgage rate is lower than they could otherwise get. What the Langoons are doing is:

(A) converting their mortgage (B) assuming their mortgage (C) voiding their mortgage. (D) assigning their mortgage.

6) A standard deed which indicates that the current holder is the current owner and has the right to convey the property through a typical conveyance is often referred to as a

(A) Bargain & Sale deed. (B) quitclaim deed (C) general warranty deed (D) deed of trust.

7) An unusual, but sometimes required, deed in which the current signatory states that he/she no longer has any current or future rights to the property is referred to as a:

(A) Bargain & Sale deed. (B) quitclaim deed (C) general warranty deed (D) deed of trust.

8) One of the following is typically awarded a share of partnership profits disproportionate to their investment:

a) Limited Partner b) General Partner c) Club Investor d) Master Limited Partner

9) An end loan is:

a) The date on which a commercial mortgage terminates b) A loan made to the purchaser of a condominium c) A refinancing proposal following maturity of a commercial mortgage d) The first step in the foreclosure process

10) Regarding basic mortgage financing loans, which is incorrect?

a) A “due-on-sale” clause requires mortgage repayment when a property is sold. b) An assumable mortgage can be transferred to a new buyer. c) Commercial mortgages can never be extended. d) Mortgages have a maturity date.

11) In a typical commercial mortgage:

a) The principal is fully amortized during the loan term b) The same amount of principal is amortized each month. c) The amortization schedule is longer than the loan life d) None of the above

12) Which of the following is not used in finding the NOI?

(A) Gross Revenue (B) Annual Insurance Costs (C) Vacancy allowance (D) Mortgage Interest rate

13) Triple-Net leases have the tenant picking up all of the following expenses EXCEPT:

(A) Pro-Rated Taxes (B) Insurance (C) Air Conditioning (D) Marketing Fees for Vacant Spaces

14). We discussed six Basic Property Types, which include all of the following broad categories EXCEPT:

(A) Industrial (B) Office (C) Mixed-Use (D) Medical

15) Zoning designations fall into three broad categories, including all of the following, EXCEPT:

(A) Residential (B) Manufacturing (C) Commercial (D) Financial Services with Broadband

16) When determining the value for stabilized income-producing properties, we look to the following data points for calculations:

(A) cap rates (B) LIBOR (C) BEKA Rates of Distribution (D) Rate of building permits

17) When determining the value for vacant land, we apply the following concept to determine its value:

(A) Residual (B) Renewable (C) Reparations (D) Vituperative

Answer 1

Answer-

Q 1)

The correct option is b. Audit of prior owner’s corporate financial statement  is not typically part of property due diligence.

The other Options a,c and d which are review of asset’s historic financial and operational performance, engineering study of the building’s physical condition and Legal review of key documents are mandatory for property due diligence.

Q 2)

The correct options are c and d .The  the right to sell it, after showing a satisfactory profit which may result as a condition of extended ownership and the right to use it, subject to zoning requirement.

The other options a and b  the right to pay back a mortgage and  the right to use it, as one wishes, without regard to the rules of the lease are incorrect.

The righs of ownership include right to sell, subdivide, mortgage, develop and rent.

Q 3)

The correct option is A. Income approach is used by appraisers generally use this method for commercial buildings such as shopping centers, office buildings, and large apartment buildings.
The options B,C and D are incorrect.
The Option B - Cost approach cannot be used as it is old apartment and takes into cosideration the depreciation.
The Option C is incorrect as replacement approach is used to estimate the value of real estate when the property is relatively new.
The option D is incorrect as sales comparison approach is used to compare a property to other properties with similar characteristics that are sold recently.

Q 4)  

The selling price = $ 298000
Total area in SFT = 3200 sft

The value / SFT = $ 298000 / 3200 sft = $ 93.12 / sft

The value of the similar house with area of 2952 sft = 2952 sft x $ 93.12 = $ 274890.

Therefore the correct Option is A.  

The Options B,C and D are incorrect.

NOTE- Kindly put other questions in separate posts