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Pre-Course Quiz

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1. Reasons for buying income property do not include which of the following?
Short term appreciation
Monthly cash flow
Tax shelter
 Resale for quick profit
2. Reasons why you do not need a real estate agent to find a duplex for purchase include all except which of the following?
There is plenty of inventory available to the public
 It is relatively easy to determine value
 A commission will not be paid, so price will be lower
 Obtaining financing is similar to your personal residence
3. Items required for a legal contract include all except which of the following?
Capacity of parties
 Legal purpose
 Consideration
 Written agreement
4. A principal reason for using a real estate agent to find a 48-unit apartment building for purchase usually include which of the following?

Availability of many properties is known only to agents
An agent can better fill out the purchase offer contract
 The expertise of an agent is necessary for analyzing value of the property
An agent will insure that you obtain a good property

5. The source of funds for the down payment that would probably be least objectionable to a lender is:
Credit cards
 Life insurance policy
Second mortgage on your residence
 Unsecured personal loan
6. Things to look for when analyzing a retail center built before 1978 include all except which of the following?
Options to renew or extend
Limited liability tenants
 Lead paint disclosure forms for each tenant
 Maintenance responsibilities
7. The least troublesome event for property held in joint tenancy by two individuals is:
One of the owners gets divorced
 One of the owners files bankruptcy
 One of the owners dies
 One of the owners decides he wants to sell
8. Which of the following would probably be of least concern when purchasing a penthouse condominium built before 1978?
Radon
 Lead paint
Asbestos
Termites
9. Benefits from maintaining good accounting records includes which of the following?
Control of income and expenses
 Protection against IRS audits
 Easier financing
 All of the above
10. Advantages of investing in commercial properties (compared to residential) include all except which of the following?
Easier to get rid of bad tenants
Greater flexibility of lease terms
 Usually provide greater cash flow
Usually dealing with more sophisticated tenants
11. For Sale signs offer the best source of all types of available income properties.
True
 False
12. Advantages of investing in residential properties (compared to commercial) include which of the following?
Greater flexibility of lease terms
Simpler lease agreements
 Usually provide greater cash flow
Longer term leases
13. Disadvantages of owning many small income properties include all except which of the following?
More bookkeeping & income tax return preparation
Higher operating costs per unit, including insurance
Higher cost for outside management
Harder to finance  
14. Which of the following inspections/reports are usually required by the lender for a commercial property?
Phase 1, Mechanical & Termite
 Phase 1 & Lead Paint
 Lead Paint & Termite
 Mechanical, Roof & Phase 1
15. Important items for application forms includes all except which of the following?

License number of each vehicle
 Emergency contacts
 Bank Accounts
 All of the above

16. Written contracts are required for purchase of real estate because of the following?
U.S. Supreme Court decision
 Statute of Frauds
 Department of Real Estate Regulations
  Nation Association of Realtors Rules
17. The most important thing regarding your purchase offer is:
Low price
Early closing
Contingencies
 Vesting
18. The following are always exempt from federal lead paint law except which one?
Short-term vacation rentals
 Senior housing
 A single room rented in a house
 Housing certified as lead-free
19. The purpose of an Estoppel Certificate is:
Stop tenant from remodeling his unit
 Stop landlord from entering the unit without 24 hours notice
Stop tenant from claiming lease terms outside the lease agreement
 Stop tenant from vacating without proper notice
20. The most important factor determining the value of a commercial property is:
NOI
 Age
 Vacancy rate
 Zoning 
21. Which of the following statements are true regarding Mortgages and Trust Deeds?:
The borrower is called Mortgagee
 The lender is called Trustee
 The borrower is called Beneficiary
 None of the above
22. Which of the following forms of ownership has the worst income tax treatment?
Limited Partnership
'S' Corporation
'C' Corporation
 General Partnership
23. Which of the following is allowed under federal fair housing law?
Refusing to rent to a person with a seeing-eye pig
 Refusing to rent to a smoker
Advertising that the apartment is close to a church
 Checking criminal records only for unkempt applicants
24. Which of the following property exchanges is not allowed under Section 1031?
A rental house for a medical building 
A retail center for 120 acres of forest land.
An office building for a personal residence
A 14-unit apartment building for three 4-plexes
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