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1 ) Over how many years is the current IRS depreciation of commercial buildings?
a. 31 b. 35 c. 15 d. 10 Answre :
2) If a person buys a commercial parcel of land, how much of the property is tax depreciable?
a. 0% b. 9% c. 75% d. 55% Answre :
3) What is not considered a typical operating expense of a building?
a. Debt service b. R.E. taxes c. Insurance d. Heating fuel Answre :
4) What is included in potential rental income?
a. All possible rent for the building b. Only rent from occupied spaces c. Rent actually collected Answre :
5) What is annual debt service?
a. The total yearly mortgage expense b. The monthly expense payments c. The total expenses for a property Answre :
6) What is potential vacancy considered by an investor?
a. Credit loss b. Return of Investment c. Income adjustment Answre :
7) Potential rental income less adjustments for vacancy result in the:
a. Effective gross income b. Net operating income Answre :
8) Repair and maintenance can be calculated as a percentage of:
a. Gross operating income b. Building size c. Property size Answre :
9) A tax escalation clause could cause:
a. Additional rent b. Increased taxes c. Less rent Answre :
10.) What item would be affected by vacancy?
a.CAM charges b. Payphones c. Roof antennas Answre :
11.) As the cap rate goes up, the value of property:
a. Decreases b. Increases c. is not affected Answre :
12.) What expense item is usually based on a percentage?
a. Management fees b. Taxes c. CAM charges Answre :
13.) What is the most important figure to an investment buyer?
a. Cap Rate b. Cash on cash return c. NOI Answre :
14.) A property is listed for $1,200,000 and annual net operating income is estimated to be $115,000, what is the capitalization rate? NOI / Price = Cap Rate
a. 9.6 b. 9.25 c. 9 d. 8.25 Answre :
15.) If tenants default on their rent, under what category would this loss of income were classified?
a. vacancy and credit losses b. Annual debt service c. operating expenses d. potential rental income Answre :
16.) A 25-year mortgage loan of $150,000, with monthly payment has an annual debt service of $13,892.69. The annual interest on this loan is $13,892.69 / 12 = $1,152.72 monthly payment. Loan: $150,000, monthly payment : $1,152.72 Term : 25 yrs. what is the Interest rate ?
a. 7.950% b. 8.35% c. 8.50% d. 7.85% Answre :
17.) Calculating: Effective Gross Income
a. $180,000 b. $20,000 c. $18,000 Answre :
18.) Calculating: Net Operating Income (NOI)
Gross Income - Operating Expense ------------------------------------- What is Net Operating Income
$200,000 - 60,000 ---------- ?????????
Net Operating Income ?
a. $ 140,000 b. $14,000 c. $1,400 Answre :
19.) Use Cap Rate Formula to solve for Market Value
a. $100,000 b. $95,000 c. $90,000 Answre :
19A.) Formula to solve for the Cap Rate (use the above formula)
a. 10% b. 9% c. 8% Answre :
20.) Calculate the market value, given a NOI of $190,000 and knowing the investors in this area will buy at a 9% cap rate: NOI / Cap Rate = Market Value
a. $2,111,111 b. $2,000,000 c. $2,050,000 d. $2,100,000 Answre :
21.) Market value can be determined by:
a. The NOI divided by the cap rate b. The NOI multiplied by the cap rate c. Gross income multiplied by the Cap rate Answre :
22.) Given an NOI of $80,000 and a price of $800,000, what return is being offered to an investor?
NOI / Price = Cap Rate
a. 10.00% b. 11% c. 10.5% d. 9.25% Answre :
23.) If an investor bought the property for $726,250 all cash, and net operating expenses (NOI) of $87,150, what would be the first year rate of return on investment?
NOI / Initial Investment = Rate of Return
a. 12% b. 11.5% c. 11.0% d. 10.50% Answre :
24.) The net operating income less the annual debt service is
a. Cash Flow b. Cash on Cash c. The Equity d. Investment Return Answre :
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