1.In a gross lease, the rent is all-inclusive. The tenant pays all or most expenses associated with the property, including taxes, insurance, and maintenance on top of the rent payment.

true or false

2.In a net lease the tenant will be charged a portion of real estate taxes; property insurance; and common area maintenance items (CAMS), which include janitorial services, property management fees, sewer, water, trash collection, landscaping, parking lots, fire sprinklers, and any commonly shared area or service. These charges to the tenant are on top of the lease payments. In other words the lease payments are net of the other charges.

true or false

3.The capitalization rate, cap rate measures the annual net operating income of a commercial property relative to its market value.

true or false

4.Base your answer on the data in the listing for Walgreens (Milwaukee MSA)

9909 W Loomis Road

Franklin, WI 53132

Offered by the Boulder group,

http://www.bouldergroup.com/media/pdf/Walgreens%20-%20Franklin,%20WI%20-%20OM.pdf

If you buy this property you will have to renegotiate the lease with the tenant in less than 2 years. This may or may not be add to the value of the property.

true or false

5. Base your answers on the following real estate listings:

http://www.bouldergroup.com/media/pdf/Bank%20of%20America%20-%20Buffalo%20Grove,%20IL%20-%20OM.pdf

http://www.bouldergroup.com/media/pdf/Walgreens%20-%20Franklin,%20WI%20-%20OM.pdf

If we use the cap rate as an investment criterion then 9909 W Loomis Road Franklin, WI 53132 is better investment than 1355 W Dundee Road, Buffalo Grove, IL 60089 because it has a higher cap rate is a riskier investment because the Walgreens has a lower credit rating than Bank of America.

true or false