Term
| a branch of economists that extends the basic ideas of the early classical and neoclassical economists to better understand and predict how humans use space is termed |
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Definition
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Term
| formal arrangements and associations that members of society make to support fundamental economic and social activities are referred to as |
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Definition
|
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Term
| economists suggest that the value of something results from its |
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Definition
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Term
| marshall contended that in a perfect market, the value of a good |
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Definition
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Term
| commercial mortgages held in the portfolios of lenders are generally referred to as |
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Definition
| unsecuritized commercial mortgages |
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Term
| stocks,bonds, and cash are referred to as |
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Definition
|
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Term
| real estate in the united states represents approx what portion of the worlds wealth |
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Definition
|
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Term
| approx __ of the wealth of real estate in the united states accrues to residential property |
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Definition
|
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Term
| business real estate(except farmland) accounts for approx __ percent of the total value of real estate in the united states |
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Definition
|
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Term
| 5 perspectives of real estate |
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Definition
| investment,market,valuation,mortgage finance, and legal |
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Term
| the resources combined to form useful products in society are |
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Definition
|
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Term
| alfred marshall argued that value results from |
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Definition
| the intersection of supply and demand |
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Term
| urban economics constitutes a branch of economics that focuses on |
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Definition
| urban problems, especially housing issues |
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Term
t\f:
the fundamentals of supply and demand explain all aspects about individual and market behavior in valuing space |
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Definition
false:
much behavior is still unexplained due to the role of institutional arrangements, such as laws and regualtions |
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Term
| in addition to affecting market operations, lease contracts serve to |
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Definition
| formally identify a property's rent and the intersection of supply and demand |
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Term
| real estate can be classified as |
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Definition
| both a financial asset and a real asset |
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Term
t\f:
consisten with an open ecnomy, most of the land in every state in the united states is privately owned |
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Definition
false:
there are few us states that most of the land is owned by the govt(i.e. alaska) |
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Term
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Definition
| about one half of the world's wealth |
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Term
t\f:
commercial real estate constitutes the most valuable component of the united states real estate market |
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Definition
false:
homeowners and residential mortgage lenders jointly own the majority of united states real estate |
|
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Term
t\f:
commercial real estate owners carry more debt(as a percentage of the total property value) than residential property owners |
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Definition
false:
residential mortgages represent 44.1% of the total value of residential real estate, commercial mortgages represent 24.6% of the total value of commercial real estate |
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Term
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Definition
| a partial repayment of principal |
|
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Term
|
Definition
a measure of the current relationship between a property's income stream and price.
calculated as expected cash flow in year one divided by the initial acquisition price. |
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Term
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Definition
| loan payments made to satisfy outstanding debt(mortgage) obligations |
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Term
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Definition
| the true cost of borrowing,including the effect of up front financing costs |
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Term
|
Definition
| the yield actually earned by the investor |
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Term
|
Definition
| the adjustment required to equate the value of money received at two different points in time |
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Term
|
Definition
| mortgage loans that do not require any amortization of principal over the loan term |
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Term
|
Definition
| the rate of interest which equates the present value of the cash inflows to the present value of the cash outflows |
|
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Term
|
Definition
| the value of the property to a particular investor |
|
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Term
| loan amortization schedule |
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Definition
| a table showing the breakdown of a fixed mortgage payment between interest and the return of principal |
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Term
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Definition
| the price a typical buyer would pay should the property be place on the market for sale |
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Term
|
Definition
| the difference between the present value of the cash inflows and the value of the cash outflows |
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Term
|
Definition
| the adjustment used to find an annuity payment |
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Term
|
Definition
| the return on an investment project if held until maturity |
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Term
| An investment philosophy outlines mainly |
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Definition
| whether the real estate investor will be an active or passive investor |
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Term
t\f:
The rental rate specified in the lease contract is termed “market rent.” |
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Definition
| FALSE, it is termed “contract rent” |
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Term
t\f:
While income property markets are local, most income properties tend to be purchased by national investment companies, such as REIT’s. |
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Definition
| FALSE, income property markets may be national, but are mostly purchased by local investors. |
|
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Term
| The presentation of projected contract rents in the first year of operation is known as |
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Definition
| the property’s rental roll |
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Term
| An often critical step in reconstructing the operating statement for a property to determine its value is evaluating whether |
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Definition
| whether the existing contract rents are equal to market rents |
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Term
| The current rent that can be obtained by offering the property in the open market is termed |
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Definition
|
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Term
t\f:
Net operating income minus leasing and capital costs is termed by the text “the before tax cash flows.” |
|
Definition
| FALSE, “cash flow before debt service and income tax” |
|
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Term
t\f:
Major property improvement expenses that do not occur on a frequent and periodic basis such as roof replacements, tenant improvements, and leasing commissions are referred to as fixed costs |
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Definition
| False, leasing/capital costs |
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Term
| The net selling price is estimated by |
|
Definition
| subtracting the expected selling expenses from the expected selling price |
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Term
| The discount rate at which the NPV of the cash flows from an investment equal zero is termed the break-even point |
|
Definition
| FALSE, it’s termed the IRR |
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Term
| You can protect ___ of an acre of homeland in Florida within city limits and/or 160 acres outside city boarders. |
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Definition
|
|
Term
| Four classes of real property |
|
Definition
1. Real estate held as a personal residence
2. Real estate held for sale to others-dealer property
3. Real estate held for use in a trade or business- trade or business property
4. Real estate held as an investment for the production of income- investment property |
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Term
| Three types of income subject to federation taxation |
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Definition
• Active income (salaries, wages, bonuses, and commissions)
• Portfolio income (Interest, dividends, and capital gains)
• Passive Income (rents from real estate, and royalties from oil and gas rights) |
|
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Term
|
Definition
| 27.5 years for residential and 39 years commercial. |
|
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Term
| Highest personal tax rate is__. The capital gain rate is___ |
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Definition
|
|
Term
| Another name for a “Like-Kind Exchange” is |
|
Definition
|
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Term
| Homeowners are permitted to exclude from taxable income up to____ of the capital gain realized on the sale of their principle residence. |
|
Definition
$250,000
($500,000 for married couples filling a joint income tax return.) *Only on a personal residence. |
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Term
|
Definition
| Three things the landlord is allowed to deduct: Mortgage/interest, property tax, and depreciation. |
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Term
|
Definition
| Must not have more than 100 shareholders |
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Term
|
Definition
• Must have 100 or more shareholders in a real estate investment trust (REIT).
• Can’t have 5 or fewer shareholders holding more than 50% of the REIT’s shares.
• More than 90% of the REIT’s taxable income must be distributed to the shareholders each year in the form of dividends.
• More than 75% of the REIT’s assets must be real estate assets, cash and government securities.
• More than 75% of the REIT’s gross income must be derived from real estate. |
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Term
| All cash flows and the income tax consequences (including tax losses) of real estate ownership “flow through” directly to the individuals’ tax return in a |
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Definition
|
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Term
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Definition
| must file articles of incorporation in the state in which it is formed, must hold board meetings and receive shareholder approval on major corporate decisions, and must pay income taxes on its earnings prior to distributing dividends to its shareholders. |
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Term
| An advantage of the S corporation is that |
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Definition
| tax losses “flow through” to the investors while liability is limited. |
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Term
| A major disadvantage of a general partnership is |
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Definition
| that the partners’ liability is not limited. |
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Term
In a general partnership, income is___
Also, The personal assets of the general partners are |
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Definition
NOT taxed at both the entity and investor level.
NOT protected from legal actions against the partnership. |
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Term
| In a limited partnership, there must be at least one |
|
Definition
“general” and one “limited partner
**The general partner must assume unlimited liability. Tax losses may be used by the limited partners to offset other passive income. |
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Term
| Shareholders in real estate investment trusts receive the same liability exposure as |
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Definition
| shareholders in C corporations. |
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Term
| 8. Funds from operations (FFO) is defined as |
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Definition
| as net income, plus depreciation and the amortization of leasing expenses and tenant improvements |
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Term
| 10. Major providers of equity capital for real estate in the private market are |
|
Definition
| pension funds, commingled real estate funds and life insurers. |
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Term
| 1. One major disadvantage of owning real estate as a sole proprietorship is that the tax considerations and filing requirements are expensive |
|
Definition
| FALSE, tend to be inexpensive. |
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Term
| 2. The C corporation form of ownership is the most widely used ownership form of firms whose primary business activity is to invest in income-producing real estate. |
|
Definition
| False, the C corporation form of ownership is not typically used if the primary business of the entity is to invest in income-producing real estate |
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Term
| 3. A major drawback of S corporations for some investor groups is that they must not have more than |
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Definition
|
|
Term
| 4. General partners in a partnership are liable for |
|
Definition
| for all of the debts of the partnership, including those that may have been incurred by another partner. |
|
|
Term
| 5. A limited partnership must have at least one general partner and 35 limited partners. |
|
Definition
| . FALSE, one general and one limited |
|
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Term
| 6. A REIT raises capital for the purchase of property through the sale of its stock, borrowed funds and substantially from the retained earnings from its activities, similar to a corporation |
|
Definition
| . FALSE, a REIT distributes at least 95% of its earnings. |
|
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Term
| 7. With respect to taxable, limited liability companies (LLC’s) are similar to general and limited partnerships. |
|
Definition
|
|
Term
| 8. A____ is defined as a group of persons or legal entities who come together to carry out a particular activity. |
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Definition
|
|
Term
| 9. A fully-specified fund offered by a syndicator is a real estate mutual fund which invests in real estate corporations and REITs. |
|
Definition
| FALSE, a fully-specified fund is an offering by a limited partnership in which the syndicator has either acquired or developed all of the properties, or the rights to purchase the properties. |
|
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Term
| 10. REITs that invest a significant percentage of their assets in both properties and mortgages are termed commingled REITs. |
|
Definition
| FALSE, these REITs are termed hybrid REITs. |
|
|
Term
| • Statute of frauds (created in 1677): |
|
Definition
| ): Real estate lease must be in writing. |
|
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Term
| • In Florida, you can have oral lease for contracts up to |
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Definition
|
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Term
|
Definition
| Lessees pay property tax, insurance and maintenance. |
|
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Term
| • The most complex leases are |
|
Definition
|
|
Term
| • Ground leases generally run for terms of |
|
Definition
|
|
Term
| 1. Real estate managers that oversee the day-to-day operations of real property, such as rent collection, physical maintenance, and tenant relations are |
|
Definition
|
|
Term
| 2. Real estate managers that advise owners of investment portfolios about the kinds of investments needed to fulfill the overall objectives for risk and return are |
|
Definition
|
|
Term
| 3. The promotion and marketing of space to neighboring users is termed |
|
Definition
|
|
Term
| 4. The development of a recognizable logo which tries all advertising and promotional material together is an example of what the text calls |
|
Definition
| thematic image marketing. |
|
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Term
| 5. According to the text, some experts believe that___ of those who sign leases do so because they received a favorable impression when viewing the property. |
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Definition
|
|
Term
| 6. The primary guidelines for evaluating the quality of prospective tenants include examining |
|
Definition
| a tenant’s creditworthiness, compatibility with existing tenants and permanence potential. |
|
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Term
| 7. The value of the leased fee estate is equal to |
|
Definition
| the value of the fee simple estate minus the value of the leasehold estate. |
|
|
Term
| 8. A lease type that generally runs for the longest terms (20 to 99 years) and calls for absolutely net rental payments is |
|
Definition
|
|
Term
| 10. In a triple-net lease |
|
Definition
| The tenant pays the real estate taxes, maintenance, and insurance. |
|
|
Term
| 1. On retail leases, rent is often paid as a percentage of gross sales receipts over some predetermined sales amount, this rent is termed the base rent |
|
Definition
| FALSE, a percentage rent, or overage rent, is paid on gross sales receipts over a predetermined sales figure. |
|
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Term
| 2. Sometimes commercial lease rentals are tied to an index, usually the consumer price index. |
|
Definition
|
|
Term
| 3. In a net-net lease, the first “net” provision usually obligates lessees to pay property taxes, while the second “net” obligates the landlord to pay insurance premiums |
|
Definition
| FALSE, lessees are obligated to pay both property taxes and insurance premiums. |
|
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Term
| 4. Lessees never pay all operating expenses, such as repairs and maintenance, because the landlords can increase their returns by minimizing these expenses. |
|
Definition
| FALSE, lessees may pay all operating expenses, including repairs and maintenance in a net-net-net lease. |
|
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Term
| 5. A benefit to a corporation participating in a sale-and-leaseback deal includes receiving low cost funds to invest in their main-line business projects |
|
Definition
|
|
Term
| 6. An example of a contract provision which limits the lessors exposure to unanticipated expenses is an expense stop |
|
Definition
|
|
Term
| 7. It is against the law in most states to grant the landlord a right of entry in an apartment lease. |
|
Definition
| . False, typically landlords are given the right of entry to maintain and market the apartment |
|
|
Term
| 8. A sublet of a lease involves the sale of part of the lessees’ rights where the original lessees become lessors and the parties have a sandwich lease. |
|
Definition
|
|
Term
| 9. A valid and enforceable lease does not need to contain a description of the property |
|
Definition
| False, a valid and enforceable lease must include a description of the property leased. |
|
|
Term
| 10. Property management contracts establish a fiduciary relationship between the owner and the manager |
|
Definition
|
|
Term
| 1. Perfectly competitive asset markets include all of the following characteristics, except |
|
Definition
|
|
Term
| 2. A market in which investors do not use information about previous transactions and other publicly available information is termed an |
|
Definition
|
|
Term
| 3. Early economists argued that good access creates value because it results in |
|
Definition
| lower transportation costs |
|
|
Term
| 4. In determining where to locate, a firm considers the ability of the firm to substitute building improvements for: |
|
Definition
|
|
Term
| 5. In an urban area, the most desired locations are occupied by: |
|
Definition
| : the most productive use. |
|
|
Term
| 6. Transportation costs _____, and the price of land ____ as the distance to an economic activity center of a city increases |
|
Definition
|
|
Term
| 7. What type of rent is generally recognized as the best measure of the true cost of occupied space? |
|
Definition
|
|
Term
| 8. As discussed in the text, the Q statistic is defined as |
|
Definition
| as a property’s market value divided by its replacement cost. |
|
|
Term
| 1. During the past decade in the United States and in many other developed nations, the real estate asset market evolved into two markets: the traditional property market and a securitized market |
|
Definition
|
|
Term
| 2. Deviations in transaction prices from the estimated market values supported by market fundamentals are often referred to as “noise.” |
|
Definition
|
|
Term
| 3. A Q ratio greater than one indicates that the price of existing properties appear cheap relative to their replacement costs. |
|
Definition
| FALSE, a Q value greater than one suggest that transactions prices exceed replacement costs. |
|
|
Term
| 4. Expectations of variability are embedded in the discount rate, which in turn affect asset prices |
|
Definition
|
|
Term
| 5. A speculative bubble exists when developers purchase large tracts of land surrounding an area in anticipation that growth will occur in that area |
|
Definition
| FALSE, a speculative bubble exists in the price of an asset if its price becomes high just because people think it’ll go higher in the future. |
|
|
Term
| 6. One explanation for the existence of boom-and-bust periods (cycles) in real estate is that investors need substantial periods of time to accumulate and then to invest funds. |
|
Definition
| FALSE, boom-and-bust periods are generally attributed to the long length of the construction period and mortgage lenders’ lending policies. |
|
|
Term
| 7. Rents reflect the price of space and sale prices reflect the value of assets and the right to collect rents |
|
Definition
|
|
Term
| 8. Three key trends identified in the text that will affect commercial real estate markets are population growth, technology trends, and the changes anticipated in the ethnic composition of the population. |
|
Definition
|
|
Term
| 9. A primary factor affecting the demand for office space it the number of developers in a market |
|
Definition
| FALSE, the number of developers operating in a market is a factor of supply, not demand. |
|
|
Term
| 10. If the actual vacancy rate is 15% and the natural vacancy rate is 12%, the market is said to be somewhat under-built |
|
Definition
|
|
Term
| 1. As transportation costs increase, |
|
Definition
| , the value of the land decreases relative to similar parcels with lower transportation costs. |
|
|
Term
| 2. The tendency for similar land uses to agglomerate is termed |
|
Definition
|
|
Term
| 3. All of the following are examples of problems that may arise out of a purely free market solution to zoning except: |
|
Definition
|
|
Term
| 4. An important limitation to the use of private restrictions for controlling land use is often |
|
Definition
| that they may be too costly to enforce. |
|
|
Term
| 5. The authority to control and regulate land uses |
|
Definition
| is generally vested in local jurisdictions. |
|
|
Term
| 6. A general guide to a community’s future development which includes projections of its needs for infrastructure, public services, land, and financial resources is termed |
|
Definition
|
|
Term
| 7. In a planned unit development |
|
Definition
| building densities may exceed the maximum allowed in some areas in order to provide larger areas of open space in the PUD. |
|
|
Term
| 8. Land use standards that are based on the extent to which operations impose negative externalities on the surrounding parcels, such as the impact of traffic, is termed |
|
Definition
| performance zoning standards |
|
|
Term
| 9. Among other things, zoning is intended to |
|
Definition
| minimize the risks of inherent in property ownership and enhance the degree of certainty regarding future development patterns and standards. |
|
|
Term
| 10. Inverse condemnation is |
|
Definition
| a legal action for just compensation taken by a landowner against government for a claimed partial taking, perhaps due to chance in zoning. |
|
|
Term
| 1. The notion that private property cannot be taken for public use without just compensation stems from local government ordinances, hence, this concept differs widely among various communities |
|
Definition
| FALSE, the notion of just compensation for a private property is taking stems from a phrase in the US Constitution. |
|
|
Term
| 2. Courts have overturned zoning ordinances that do not provide for low and moderate income housing on the grounds that they are exclusionary |
|
Definition
|
|
Term
| 3. A variance is a rezoning request that involves a proposal to change the zoning classification of a particular parcel |
|
Definition
| FALSE, a variance request usually involves a minor change in the rules in an existing zoning, such as a reduction of a setback limitation. |
|
|
Term
| 4. Concurrency requires the developer to pay for all new public services and facilities required as a result of the new development (e.g., intersection improvements) |
|
Definition
| FALSE, concurrency only requires that public facilities and services are in place when new development is completed- not that the developer pay for such |
|
|
Term
| 5. The use of performance standards, such as traffic capacity to a site, may be used in some communities in place of site-specific zoning classifications |
|
Definition
|
|
Term
| 6. An urban services area establishes a boundary beyond which urban development is discouraged or prohibited |
|
Definition
|
|
Term
| 7. Many communities have established permanent growth moratoria to eliminate future growth |
|
Definition
| . FALSE, a growth moratorium is a temporary measure to restrict growth to allow adequate infrastructure to be developed. |
|
|
Term
| 8. Radon is a waste component of the nuclear energy process. |
|
Definition
| FALSE, Radon is a naturally occurring radioactive gas. |
|
|
Term
| 9. A Phase II EVA is required when a Phase II report reveals the presence of significant amounts of toxic waste. |
|
Definition
| FALSE, a Phase II EVA is required when a Phase I EVA report reveals the presence of significant amounts of toxic waste. |
|
|
Term
| 10. Easements are generally identified and recorded in the subdivision plat, and they bind all future purchasers by references in deeds to restrictions and easements of record |
|
Definition
|
|
