CCIM 101 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS
Two major decision makers Users and investors
Users Those who make decisions regarding space that they need to use for their
business
Investors Those who make decisions regarding investments in properties that are or could
be leased to users
Can a user also be an investor? Yes. Even so it is useful to separate the decision to use the real estate from the
decision to invest in the real estate. A property can have great use but maybe a
bad investment.
User decisions Users want space that meets the needs of their business in terms of location, size
and layout of the space, quality of building and perhaps proximity to other
business suppliers and customers
Users decisions part two Should space be acquired?
What type and how much space should be acquired?
Where should the space be acquired?
What should the space acquisition entity be?
Should the space be a purchase or lease?
What should the acquisition process be?
User decision leased space Should discretionary capital expenditures be made?
Should the capital structure of acupuncture be changed?
Should the space utilization be changed?
Should the user continue to occupy the space?
Should any lease options be exercised?
Should the lease be renegotiated?
Should the space be disposed of?
User decisions owned space Should discretionary capital expenditures be made?
Should the capital structure be changed?
Should the space utilization be changed?
Should the user continue to occupy the space?
Should the property be sold or exchanged?
User disposition decisions What should the disposition price be?
Should should the disposition method be?
Should should the disposition process be?
Investor decisions Investors are primarily interested in receiving a return on investment (yield) that is
commensurate with the risk that they will incur by making an investment.
, Rate of return The rate of return is the percentage return on each dollar invested for each
period it is invested. Rates of return can be estimated on before tax or an after tax
basis
Acquisition decisions Should investment real estate be acquired?
What type of investment real estate should be acquired?
When should investment real estate be acquired?
Where should investment real estate be acquired?
Which of the available investment real estate alternatives should be acquired?
How should the investment real estate be acquired?
What should be the sources of debt and equity capital?
What should the investment real estate acquisition entity be?
What should the acquisition price and terms of the investment real estate be?
Investor holding period decisions Should discretionary capital expenditures be made?
Should the financing structure be changed?
Should the property use be changed?
Should the property be held or sold?
Should the operating strategy be changed?
Investor disposition decisions What should the disposition price be?
What should the disposition method be?
What should the marketing process be?
When will investors invest in real estate? Investors will only invest in real estate if it has an expected return that is
competitive with other investment alternatives of comparable risk. Real estate
competes for investor dollars with other investments alternatives.
What two major asset classes compete with real estate To understand the real estate universe, the discussion must involve commercial
for investment capital? real estate as it compares to the tow major asset classes that compete with real
estate of investment capital bonds and stocks.
Prior to 1960 major institutions invested only in highly Investors are giving significant attention to another major asset class commercial
liquid bonds. Stocks were ignored due to a lack of real estate. Commercial real estate is a significant portion of the capital market
information and transparency. Now and now considered to be an asset class like stocks and bonds
When developing a risk and and return profile for a Commercial real estate has investment behavior attributes similar to both the
property you should keep what important basic concept bond market and the stock market. Contract leases behave like bonds, and the
in mind? upside created in commercial real estate by re-tenanting and repositioning
simulates the investment characteristics of the stock market. It is often thought
that I leveraged, institutional commercial real estate should provide returns
somewhere in between bonds and stocks.
How does real estate help to reduce the overall risk of a The risk and return of real estate may fall between that of stocks and bonds real
portfolio estate tends to be impacted by different economic events that stocks and bonds.
Real estate tends to be better in an inflationary environment. The returns for real
estate are not highly correlated with that of stocks and bonds including real
estate in the portfolio tends to smooth out the performance of the portfolio.
Two major decision makers Users and investors
Users Those who make decisions regarding space that they need to use for their
business
Investors Those who make decisions regarding investments in properties that are or could
be leased to users
Can a user also be an investor? Yes. Even so it is useful to separate the decision to use the real estate from the
decision to invest in the real estate. A property can have great use but maybe a
bad investment.
User decisions Users want space that meets the needs of their business in terms of location, size
and layout of the space, quality of building and perhaps proximity to other
business suppliers and customers
Users decisions part two Should space be acquired?
What type and how much space should be acquired?
Where should the space be acquired?
What should the space acquisition entity be?
Should the space be a purchase or lease?
What should the acquisition process be?
User decision leased space Should discretionary capital expenditures be made?
Should the capital structure of acupuncture be changed?
Should the space utilization be changed?
Should the user continue to occupy the space?
Should any lease options be exercised?
Should the lease be renegotiated?
Should the space be disposed of?
User decisions owned space Should discretionary capital expenditures be made?
Should the capital structure be changed?
Should the space utilization be changed?
Should the user continue to occupy the space?
Should the property be sold or exchanged?
User disposition decisions What should the disposition price be?
Should should the disposition method be?
Should should the disposition process be?
Investor decisions Investors are primarily interested in receiving a return on investment (yield) that is
commensurate with the risk that they will incur by making an investment.
, Rate of return The rate of return is the percentage return on each dollar invested for each
period it is invested. Rates of return can be estimated on before tax or an after tax
basis
Acquisition decisions Should investment real estate be acquired?
What type of investment real estate should be acquired?
When should investment real estate be acquired?
Where should investment real estate be acquired?
Which of the available investment real estate alternatives should be acquired?
How should the investment real estate be acquired?
What should be the sources of debt and equity capital?
What should the investment real estate acquisition entity be?
What should the acquisition price and terms of the investment real estate be?
Investor holding period decisions Should discretionary capital expenditures be made?
Should the financing structure be changed?
Should the property use be changed?
Should the property be held or sold?
Should the operating strategy be changed?
Investor disposition decisions What should the disposition price be?
What should the disposition method be?
What should the marketing process be?
When will investors invest in real estate? Investors will only invest in real estate if it has an expected return that is
competitive with other investment alternatives of comparable risk. Real estate
competes for investor dollars with other investments alternatives.
What two major asset classes compete with real estate To understand the real estate universe, the discussion must involve commercial
for investment capital? real estate as it compares to the tow major asset classes that compete with real
estate of investment capital bonds and stocks.
Prior to 1960 major institutions invested only in highly Investors are giving significant attention to another major asset class commercial
liquid bonds. Stocks were ignored due to a lack of real estate. Commercial real estate is a significant portion of the capital market
information and transparency. Now and now considered to be an asset class like stocks and bonds
When developing a risk and and return profile for a Commercial real estate has investment behavior attributes similar to both the
property you should keep what important basic concept bond market and the stock market. Contract leases behave like bonds, and the
in mind? upside created in commercial real estate by re-tenanting and repositioning
simulates the investment characteristics of the stock market. It is often thought
that I leveraged, institutional commercial real estate should provide returns
somewhere in between bonds and stocks.
How does real estate help to reduce the overall risk of a The risk and return of real estate may fall between that of stocks and bonds real
portfolio estate tends to be impacted by different economic events that stocks and bonds.
Real estate tends to be better in an inflationary environment. The returns for real
estate are not highly correlated with that of stocks and bonds including real
estate in the portfolio tends to smooth out the performance of the portfolio.
