TEXAS SAE REAL ESTATE INVESTMENT 2 LATEST VERSIONS
(VERSIONS A & B) ACTUAL EXAM 300 REAL EXAM QUESTIONS
AND CORRECT DETAILED ANSWERS
Which class of office building is aimed at tenants requiring functional space at below-
average rents for the area? - ANSWER: Class C
Class C office buildings command below-average rates for the area. They're
functional, but not prestigious.
With a triple net lease, the tenant pays _______ separately from the base rent. -
ANSWER: Taxes, insurance, and maintenance
When two very similar properties are for sale in the same neighborhood, which one
will sell first according to the principle of substitution? - ANSWER: The lower priced
home
To protect themselves from liability, it's a good idea for property managers to
______. - ANSWER: Stay up to date on local landlord-tenant laws
According to the International Council for Shopping Centers, which commercial
property comprises only 1% of the retail industry? - ANSWER: Factory outlet
Which payment plan consists of the borrower paying a constant amount made up of
principal and interest on a periodic basis (usually monthly)? - ANSWER: Fully
amortized loan payment plan
Why are many middle-income cooperatives converted to condominiums? - ANSWER:
To make resale easier
What type of lease is used most often with community shopping centers? - ANSWER:
percentage
Property taxes generate approximately ______ of local government revenue. -
ANSWER: one third (1/3)
Brittany has a small office in a professional building. She has a set monthly lease
payment that has been calculated to include maintenance of the common areas in
the building, such as the restroom and small kitchen, and all nets, utilities, and
janitorial charges for her space. The payment also includes taxes and insurance. The
landlord takes these payments and pays the individual expenses himself. What type
of lease does Brittany have? - ANSWER: Gross lease
,Which of the following statements best describes the judicial foreclosure and sale
process? - ANSWER: The lender must seek the court's permission to foreclose on
the property used as collateral for the loan.
What's compound interest? - ANSWER: Interest that's reinvested into an account
that then earns interest
The owner's covenants and an insurance provision are included in which of the
following documents? - ANSWER: Property management agreement
What's the name of the tax program that requires a withholding of a portion of the
gross purchase price when foreign owners of real estate in the U.S. sell that
property? - ANSWER: Foreign Investment in Real Estate Property Tax Act (FIRPTA)
Jenner purchased his first home, to which he'll have access forever, as far as he
knows. Jenner owns ______. - ANSWER: A freehold estate
What is the formal action to impose the property tax? - ANSWER: levy
Which clause in a commercial lease determines how the tenant may use the space? -
ANSWER: Use
The element of a deed that signifies the grantor's intention to transfer title to the
grantee is the ______. - ANSWER: Act of conveyance
Lyn runs a brokerage and maintains a master file for all the office transactions. The
file must be maintained for how long? - ANSWER: As long as Lyn's state requires
All files must be maintained on state law requirements.
Milo is interested in converting his rental properties into condominiums. He's
completed his feasibility study and determined that the conversion costs will pay for
themselves at sale time and the market will support the conversion. What else does
Milo need to do prior to conversion? - ANSWER: Make certain the conversion will
be allowed by the local government
Ricky Nubbins is three months behind in his rent and has received several reminders
from the landlord that the rent is past due. As a result, the landlord has begun
working through proper channels to legally end Ricky's lease before the contract end
date. The landlord is terminating his lease through ______. - ANSWER: Eviction
If you and a sibling both inherited your father's property when he died, what type of
deed would you need to get from your sibling in order to be the sole owner of the
property? - ANSWER: Quitclaim deed
,What is the name of the tenant group that, along with the property manager, is
responsible for regional shopping center promotional activities? - ANSWER:
Merchants' association
Quentin is a victim of fair housing discrimination who is seeking redress in federal
court. What is the limit on the amount of punitive damages he may be awarded? -
ANSWER: There is no limit
Which of the following is a passive type of real estate investment? - ANSWER: limited
partnership
Which statement best describes an amortized loan? - ANSWER: Debt that is paid off
by making periodic payments consisting of interest and principal
With an amortized loan, the principal is paid down over the life of the loan according
to an amortization schedule, typically through equal payments.
Kristoff got a bit behind on his mortgage and missed several payments. He and his
lender devised a schedule that gives Kristoff an opportunity to make up those
delinquent payments. What is this an example of? - ANSWER: Repayment plan
Kali's good at bargaining. She's willing to concede some things in order to entice a
new tenant into taking one of the rental spaces in the mall, but she always ensures
that she's looking out for the owner's interests by including a certain number of
escalation clauses. Which commercial property manager duty is Kali exceptionally
good at? - ANSWER: Leasing the property
Who is the withholding agent under Foreign Investment in Real Property Tax Act? -
ANSWER: Buyer
Property manager Elise sends a monthly report to her client Katherine, who owns an
apartment complex. What can Katherine expect to see on this report? - ANSWER:
Rental receipts, income, disbursements, and operating expenses
Who might be impacted by the expiration of abatements? - ANSWER: New buyers
Cooperative owners are actually called ______. - ANSWER: Shareholders
Hester has been doing her research and attending city planning meetings in hopes of
finding a single-family home on the edge of a commercial district. What type of
investment opportunity is Hester looking for? - ANSWER: A home targeted for
rezoning
Which of the following investors is exempt from fair housing laws? - ANSWER: An
investor who owns fewer than three single-family homes
, An investor who owns three or fewer single-family homes, and who doesn't use real
estate licensees to assist in the sale of the investment properties is exempt from fair
housing laws.
If a minor enters into a contract with an adult, which of the following is true? -
ANSWER: The minor may legally hold the adult to the contract, but the adult cannot
legally hold the minor to the contract.
Deidra wants to invest in a super-regional shopping center. What size trade area can
she plan to service? - ANSWER: Five to 25 miles
Which of the following statements about an office condo owner's responsibilities is
true? - ANSWER: The owner is responsible for paying the PITI.
An LOA of 10% means that assessments are _________. - ANSWER: At 10% of value
Leases may be terminated by expiration, eviction, or ______. - ANSWER: Mutual
agreement
Leases may be terminated by expiration, eviction, or mutual agreement.
Liz is assisting a client who's looking for a commercial space to lease. Which of the
following duties will Liz be expected to perform on her client's behalf? - ANSWER:
Represent her client's interest in all negotiations and transactions regarding the
lease of the property.
Which of the following is an advantage of leasing for a single-lot investor? - ANSWER:
Leasing gives the investor an income stream for the term of the lease.
(Leasing provides the investor with an income stream for the term of the lease. The
investor may also use a long-term lease as collateral to get financing for additional
investments.)
In commercial lease agreements, tenants pay the owner in exchange for ______. -
ANSWER: The right to operate their business on the property
Which of the following organizations is temporary in nature? - ANSWER: Joint
venture
Which of the following could indicate an underground storage tank is present? -
ANSWER: Pipe or vent sticking out of the ground
Which special lease clause stipulates that the tenant is responsible for paying any
increase in taxes over the base year's taxes, in addition to the base rent? - ANSWER:
Tax
(VERSIONS A & B) ACTUAL EXAM 300 REAL EXAM QUESTIONS
AND CORRECT DETAILED ANSWERS
Which class of office building is aimed at tenants requiring functional space at below-
average rents for the area? - ANSWER: Class C
Class C office buildings command below-average rates for the area. They're
functional, but not prestigious.
With a triple net lease, the tenant pays _______ separately from the base rent. -
ANSWER: Taxes, insurance, and maintenance
When two very similar properties are for sale in the same neighborhood, which one
will sell first according to the principle of substitution? - ANSWER: The lower priced
home
To protect themselves from liability, it's a good idea for property managers to
______. - ANSWER: Stay up to date on local landlord-tenant laws
According to the International Council for Shopping Centers, which commercial
property comprises only 1% of the retail industry? - ANSWER: Factory outlet
Which payment plan consists of the borrower paying a constant amount made up of
principal and interest on a periodic basis (usually monthly)? - ANSWER: Fully
amortized loan payment plan
Why are many middle-income cooperatives converted to condominiums? - ANSWER:
To make resale easier
What type of lease is used most often with community shopping centers? - ANSWER:
percentage
Property taxes generate approximately ______ of local government revenue. -
ANSWER: one third (1/3)
Brittany has a small office in a professional building. She has a set monthly lease
payment that has been calculated to include maintenance of the common areas in
the building, such as the restroom and small kitchen, and all nets, utilities, and
janitorial charges for her space. The payment also includes taxes and insurance. The
landlord takes these payments and pays the individual expenses himself. What type
of lease does Brittany have? - ANSWER: Gross lease
,Which of the following statements best describes the judicial foreclosure and sale
process? - ANSWER: The lender must seek the court's permission to foreclose on
the property used as collateral for the loan.
What's compound interest? - ANSWER: Interest that's reinvested into an account
that then earns interest
The owner's covenants and an insurance provision are included in which of the
following documents? - ANSWER: Property management agreement
What's the name of the tax program that requires a withholding of a portion of the
gross purchase price when foreign owners of real estate in the U.S. sell that
property? - ANSWER: Foreign Investment in Real Estate Property Tax Act (FIRPTA)
Jenner purchased his first home, to which he'll have access forever, as far as he
knows. Jenner owns ______. - ANSWER: A freehold estate
What is the formal action to impose the property tax? - ANSWER: levy
Which clause in a commercial lease determines how the tenant may use the space? -
ANSWER: Use
The element of a deed that signifies the grantor's intention to transfer title to the
grantee is the ______. - ANSWER: Act of conveyance
Lyn runs a brokerage and maintains a master file for all the office transactions. The
file must be maintained for how long? - ANSWER: As long as Lyn's state requires
All files must be maintained on state law requirements.
Milo is interested in converting his rental properties into condominiums. He's
completed his feasibility study and determined that the conversion costs will pay for
themselves at sale time and the market will support the conversion. What else does
Milo need to do prior to conversion? - ANSWER: Make certain the conversion will
be allowed by the local government
Ricky Nubbins is three months behind in his rent and has received several reminders
from the landlord that the rent is past due. As a result, the landlord has begun
working through proper channels to legally end Ricky's lease before the contract end
date. The landlord is terminating his lease through ______. - ANSWER: Eviction
If you and a sibling both inherited your father's property when he died, what type of
deed would you need to get from your sibling in order to be the sole owner of the
property? - ANSWER: Quitclaim deed
,What is the name of the tenant group that, along with the property manager, is
responsible for regional shopping center promotional activities? - ANSWER:
Merchants' association
Quentin is a victim of fair housing discrimination who is seeking redress in federal
court. What is the limit on the amount of punitive damages he may be awarded? -
ANSWER: There is no limit
Which of the following is a passive type of real estate investment? - ANSWER: limited
partnership
Which statement best describes an amortized loan? - ANSWER: Debt that is paid off
by making periodic payments consisting of interest and principal
With an amortized loan, the principal is paid down over the life of the loan according
to an amortization schedule, typically through equal payments.
Kristoff got a bit behind on his mortgage and missed several payments. He and his
lender devised a schedule that gives Kristoff an opportunity to make up those
delinquent payments. What is this an example of? - ANSWER: Repayment plan
Kali's good at bargaining. She's willing to concede some things in order to entice a
new tenant into taking one of the rental spaces in the mall, but she always ensures
that she's looking out for the owner's interests by including a certain number of
escalation clauses. Which commercial property manager duty is Kali exceptionally
good at? - ANSWER: Leasing the property
Who is the withholding agent under Foreign Investment in Real Property Tax Act? -
ANSWER: Buyer
Property manager Elise sends a monthly report to her client Katherine, who owns an
apartment complex. What can Katherine expect to see on this report? - ANSWER:
Rental receipts, income, disbursements, and operating expenses
Who might be impacted by the expiration of abatements? - ANSWER: New buyers
Cooperative owners are actually called ______. - ANSWER: Shareholders
Hester has been doing her research and attending city planning meetings in hopes of
finding a single-family home on the edge of a commercial district. What type of
investment opportunity is Hester looking for? - ANSWER: A home targeted for
rezoning
Which of the following investors is exempt from fair housing laws? - ANSWER: An
investor who owns fewer than three single-family homes
, An investor who owns three or fewer single-family homes, and who doesn't use real
estate licensees to assist in the sale of the investment properties is exempt from fair
housing laws.
If a minor enters into a contract with an adult, which of the following is true? -
ANSWER: The minor may legally hold the adult to the contract, but the adult cannot
legally hold the minor to the contract.
Deidra wants to invest in a super-regional shopping center. What size trade area can
she plan to service? - ANSWER: Five to 25 miles
Which of the following statements about an office condo owner's responsibilities is
true? - ANSWER: The owner is responsible for paying the PITI.
An LOA of 10% means that assessments are _________. - ANSWER: At 10% of value
Leases may be terminated by expiration, eviction, or ______. - ANSWER: Mutual
agreement
Leases may be terminated by expiration, eviction, or mutual agreement.
Liz is assisting a client who's looking for a commercial space to lease. Which of the
following duties will Liz be expected to perform on her client's behalf? - ANSWER:
Represent her client's interest in all negotiations and transactions regarding the
lease of the property.
Which of the following is an advantage of leasing for a single-lot investor? - ANSWER:
Leasing gives the investor an income stream for the term of the lease.
(Leasing provides the investor with an income stream for the term of the lease. The
investor may also use a long-term lease as collateral to get financing for additional
investments.)
In commercial lease agreements, tenants pay the owner in exchange for ______. -
ANSWER: The right to operate their business on the property
Which of the following organizations is temporary in nature? - ANSWER: Joint
venture
Which of the following could indicate an underground storage tank is present? -
ANSWER: Pipe or vent sticking out of the ground
Which special lease clause stipulates that the tenant is responsible for paying any
increase in taxes over the base year's taxes, in addition to the base rent? - ANSWER:
Tax
