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Flashcards in Real Property Investment II Deck (12)
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1
Q

Dividends

A

Returns from investments in a stock/REIT.

2
Q

Operating Statement includes what ____ & _____

A

Income and Expenses associated with operating property

3
Q

Who uses a “pro forma” statement?

A

generally used by prospective purchasers/investors as a means of forecasting the property’s performance or determining its value.

4
Q

T/F

A fixed expense is one that will vary depending on vacancy or occupancy levels

A

False

5
Q

Cash on Cash Return Formula

A

Cash Flow / Purchasing Costs = Cash on Cash Return

6
Q

Straight Line depreciation : Residential income - is how long?

A

27.5 years (useful life)

7
Q

Straight line depreciation: Non residential income – how many years?

A

39 years (useful life)

8
Q

Larry paid 240,000 for a duplex. According to the local tax assessor. the value of the land on which the duplex sits is $20,000. How much can Larry deduct this year from his income tax?

A

$220,000/27.5 = $8000

9
Q

Where can a property be exchanged for any other real property?

A

ONLY in the US.

10
Q

T/F

An investor who takes advantage of a 1031 Exchange has more buying power on the second purchase than another investor who simply sells one property to purchase another

A

True - they can use the funds that otherwise would have been paid in taxes for part of his purchase

10
Q

Operating Expense Ratio

A

Operating Expense / Effective Gross Income

11
Q

Loan to Value Ratio

A

Loan Amount / Property Value