Questions and Answers of Real Estate Principles

In the early stages of the commercial real estate development process, what are the primary sources of capital? Why?
What are the largest sources of equity capital for commercial real estate? Which has grown fastest over the past decade?
What is the normal sequence of financing for real estate development?
What are CMBSs?
How is the required rate of return different from the cap rate?
How can one determine the market expectation of inflation?
Describe the four quadrants of the capital markets.
Explain how the quality and stability of a property’s income stream are determined by its space market.
Discuss the market for commercial real estate in terms of its space market and capital market components.
What advantages does a city gain by working within a public/private partnership?What advantages does a developer gain? What are some of the practical problems or points of tension in such a business
Describe the key decisions the public sector faces in implementing a public/private partnership.
What are some ways the development team can build public support for a project?
Describe how the approvals process has changed over time.
Who are the various stakeholders involved in the approvals process?
What are special taxing districts?
Explain the bundle of rights of property ownership.
Discuss how developer fees and exactions work.
What are the roles of state and regional agencies in regulating development?
What are the mainstays of local governments’ regulatory programs and how do they affect development?
What is police power and how is it enforced? Who has a stronger obligation in the exercise of police power—the federal government or the states? Why?
Real estate is always said to be a cyclical business. What are some of the financial cycles that have occurred since 1970?
What is a new community?
What is a CDC, and what is its role in community building?
What spurred the urban crisis of the 1960s, and what housing-related programs were initiated because of it?
How and why did retailing change in the 1950s and 1960s?
Describe the urban renewal efforts of the 1950s and 1960s.
How and why did homebuilding production methods change after World War II?
Why was Rockefeller Center such an important project?
What was the role of the Federal Housing Administration in financing housing and homeownership?
What strategies were used in the New Deal to revive the Great Depression economy?
How did the advent of creative financing change real estate markets in the United States?
How did real estate trade associations come about?
What was a garden city and how did the movement evolve?
What was the City Beautiful movement?
Discuss the role of the downtown department store at the turn of the century.
Discuss the history of the skyscraper—its construction, its symbolism, and how it shaped cities.
What happened to downtowns as transportation networks allowed people to move farther and farther out of the city?
Discuss the role of the railroads in land development.
Describe the evolution of slums.
What is the balloon-frame method of construction, and what effect did it have on residential development?
Who was Llewellyn Haskell?
What effect did private deed restrictions and public controls have on real estate in the 19th century?
What was the Holland Land Company noted for?
Describe the fee simple system of private ownership.
How was public land put into private ownership?
How does the eight-stage model help the developer think about assembling the right team for a particular development?
Describe the various types of financial players and when they are involved in the development process.
Why are appraisers involved before, during, and at project completion?
Why do developers need environmental and transportation consultants more often now than 20 years ago?
Describe the expanded role of the landscape architect.
Why are contractors critical to the developer’s work?
Why might development of a mixed-use project be more difficult than development of a single property type?
Describe the architect’s role in the development process.
What are the most common forms of compensation for developers?
What portion of land in the United States is developed?
How will the significant growth in the “Professional and Business Services” and the“Health Care and Social Assistance” employment sectors affect the demand for real estate?
How might the housing market be affected by a population in which less than 30 percent of all households have children under the age of 18?
How does the aging baby boom generation affect the population pyramid?
How significant is the construction industry to the nation’s overall economy?
Why is it important for real estate players to stay well informed about trends?
How does employment growth influence the demand for commercial space?
How does immigration affect demand for real estate?
Describe the anticipated changes in the composition of the U.S. population.
Why is real estate so important to the U.S. economy?
Why have U.S. developers looked outside the country for development opportunities?
Why is ownership of real estate more attractive in the United States than in many other countries?
What role does time play in the real estate development process?
Discuss the many roles a developer must play.
Discuss the importance of good design in development.
Why and how do developers use market research and feasibility studies?
Why is real estate development inherently an interdisciplinary process?
What are the advantages of using such a model? What are the pitfalls?
What are the eight stages of development as delineated in this textbook?
What is the role of the developer in the development process?
Why does every real estate development project involve both the public and the private sectors?
What is real estate development?
The investor invests $45,000 into an account that pays 4%/year compounded monthly. At the end of 4 years, what is the balance of the account? LO1
The investor invests $25,000 into an account that pays 5%/year compounded semi-annually.At the end of 3 years, what is the balance of the account? LO1
The investor invests $10,000 into an account that pays 6%/year compounded quarterly. At the end of the year, what is the balance of the account? LO1
An investor realizes the market value of a property is $798,000. The investor purchased the property 8 years ago for $530,000. What is the investor’s annual rate of return for the 8 years held? LO1
An investor purchases an asset for $450,000 and expects the market to return 6.00%/year for 10 years. What is the investor’s final sale price for the asset at the end of 10 years? LO1
An investor invests $50,000 in an insurance product that is guaranteed to return $75,000 in 2 years. What is the annual rate of return for the product? LO1
Jason invests in tax credits that accrue annual interest at 18.00%. He invests $20,000 and expects full repayment at the end of the 24th month. What will Jason’s payment be at the end of month 24?
Lena lends $15,000 to her daughter to purchase a car but expects to be repaid in 3 years. Lena expects her daughter to pay her 3.00% annual compounded return. What will Lena’s daughter owe at the
Chandler invests $25,000 for 10 years in a financial product with a guaranteed compounded annual return of 4.00%. What is Chandler’s account balance at the end of 10 years? LO1
Ayla has borrowed $75,000 @ 6.00% for 6 years. How much interest has accrued over the 6 years and what is the total outstanding balance assuming no principal pay down and simple interest calculation?
Assuming there was no principal pay down during the 5 years, what is the ending balance for John, see problem #1, at the end of 5 years? LO1
John has borrowed $50,000 @ 5.00%/year for 5 years. How much interest has accrued at the end of 5 years if using simple interest? LO1
A 12-month loan with principal balance of $11,500 and structured as a CPM style amortization having 6.50% fixed interest will cause the borrower to pay how much in total payments over the life of the
A 12-month loan with principal balance of $7,550 and structured as a CPM style amortization having 4.50% fixed interest will cause the borrower to pay how much in principal on a pre-tax basis?
A 12-month loan with principal balance of $2,500 and structured as a CPM style amortization having 6.00% fixed interest will cause the borrower to pay how much in interest on a pre-tax basis? (Note:
Under the debt financing alternative, only $100,000 is required at CF0 and the project will provide an annual return after debt service of $18,000 for each of the 5 years. In addition, the reversion
A small multifamily rental property can be funded with either 100% equity or 100% debt financing. Under the equity option, the property will require $550,000 of capital in CF0 and return annual
An investor is considering purchasing a four-unit multifamily but is limited on capital. The individual has $125,000 and the purchase price is $625,000. The individual has a commitment from a local
Determine the sales price for a property with an expected NOI of $26,000 and a cap rate of 9.00%.a) $288,880b) $276,888c) $288,889d) $288,276
Determine the NOI for a property with a capitalization rate of 5.50% and a sales price of$1,000,000.a) $55,000b) $50,000c) $60,000d) $50,500
Determine the capitalization rate for a property with a sales price of $400,000 and an expected Net Operating Income (NOI) of $18,000 in the year following the property’s sale.a) 4.25%b) 4.62%c)
For the scenarios listed above, what is the IRR (or XIRR) for these cash flows if returned on a monthly as opposed to an annual basis, i.e. 31 Dec 2021, 31 Jan 2022, 28 Feb 2022, and 31 Mar 2022?a)
Calculate the IRR for the following project. An outflow of $14,000 in year 0 was followed by an inflow of 0 for 2 years with $16,000 returned in the third year. How does this change if the cash flows
Assume a project has a net income of $70,000, the project has operating expenses of $40,000 and a debt service of an additional $38,000 annually. New management means to cut cost to current expenses

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