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Test Your Knowledge of Real Estate

1 / 20

Tenants who cause damage to their units are liable only up to the amount of their security deposit.

2 / 20

It’s often better to reduce rents during slow leasing periods even though it will have a negative effect on net operating income and property value in the short run.

3 / 20

If inflated water and sewer costs due to leaks are not corrected, not only will you lose substantial cash flow but your NOI and property value will also be adversely affected.

4 / 20

A good rule of thumb to estimate total payroll expenses would be to add approximately 10% - 15% to the amount of the actual gross wages.

5 / 20

A property has an NOI of $250,000 and is selling for $6,500,000. Therefore, the property is selling at a 6.5% cap rate.

6 / 20

A Risk Fee is charged when a lease has expired and a tenant needs to stay longer but won’t renew their lease.

7 / 20

Which of the following should not be considered other income?

8 / 20

As a general rule it’s ok to keep purchasing properties in the same entity since it reduces the cost of legal fees, bank fees, bookkeeping, etc.

9 / 20

Which of the following doesn’t contribute to market cap rate changes?

10 / 20

Which of the following is not considered rent?

11 / 20

Which of the following has nothing to do with the size of a unit?

12 / 20

If you are able to increase NOI by $5,000 a year, assuming a 5% cap rate you increased property value by:

13 / 20

Which of the following is generally not included on a rent roll?

14 / 20

A $10,000 increase in Total Operating Revenue or a $10,000 decrease in Total Operating Expenses has the same effect on NOI and property value.

15 / 20

Which of the following is the most important benefit of owning real estate?

16 / 20

The individual names of the operating expense accounts and categories generally depend upon the management agents computer program and chart of accounts

17 / 20

The All Bills Paid (“ABP”) method usually saves the owner money since the utility accounts are opened in the tenants name and H-VAC is controlled by the owner.

18 / 20

If you can decrease an operating expense by $1 in a 4% cap rate market and also increase revenue by $1, property value will increase by:

19 / 20

The lower the cap rate, the lower the value of the property. The higher the cap rate, the higher the value of the property.

20 / 20

The Letter of Intent (“LOI”) is a binding document that serves to set forth the basic terms and conditions upon which the buyer and seller will enter into a much more definitive document known as the Contract of Sale (“Contract”).

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