Real Estate 306 Final 2025/2026 Exam
Questions and Answers | 100% Solved
1
potential gross income - 🧠 ANSWER ✔✔the amount that would be collected
if the property was fully occupied at market rents
miscellaneous income - 🧠 ANSWER ✔✔the amount received from services
associated with a property such as laundry, parking, or storage
vacancy and collection loss - 🧠 ANSWER ✔✔the amount of expected loses
from vacancies and bad debts
effective gross income - 🧠 ANSWER ✔✔potential gross income minus
vacancy and collection
operating expenses - 🧠 ANSWER ✔✔expenses associated with the
operation of the property
net operating income - 🧠 ANSWER ✔✔effective gross income minus
operating expenses
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,depreciation - 🧠 ANSWER ✔✔allowable amount that can be deducted
annually as an expense under IRS codes
2
taxable income - 🧠 ANSWER ✔✔net operating income minus depreciation
minus interest payments
before tax cash flow - 🧠 ANSWER ✔✔the net amount of all revenues and
expenses prior to tax considerations
after tax cash flow - 🧠 ANSWER ✔✔before tax cash flow minus income
taxes or plus allowable income tax losses
capital reserves - 🧠 ANSWER ✔✔amount set aside each year for replacing
costly short-lived items such as roofing, appliances, and mechanical
equipment
mill rate - 🧠 ANSWER ✔✔represents $1 of tax assessment per $1,000 of
assessed property value
terminal cap rate - 🧠 ANSWER ✔✔the cap rate we except when we sell the
property
amortization - 🧠 ANSWER ✔✔this is the number years over which the loan
will fully amortize
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,term - 🧠 ANSWER ✔✔when the loan is actually due
lease - 🧠 ANSWER ✔✔legal contract between tenant and owner for use
3
and possession of real estate
lease - 🧠 ANSWER ✔✔the "engines" that "drive" values and returns
contain elements of a valid contract to be enforceable such as competent
parties, legal use, provide something of value - 🧠 ANSWER ✔✔essential
elements of lease
class a property - 🧠 ANSWER ✔✔commands highest rents because they
are the most prestigious in their tenancy, location, and overall desirability
usually newer structures
typically owned by institutional investors
class b property - 🧠 ANSWER ✔✔rents usually less than class a buildings
because of a less desirable location, fewer amenities, less impressive
lobbies, elevators, etc
class c property - 🧠 ANSWER ✔✔usually once class a or b are older and
reasonable well maintained but are below current standards for one or
more reasons
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, 1. sales comparison
2. cost approach
4
3. income approach - 🧠 ANSWER ✔✔three approaches to value
sales comparison approach - 🧠 ANSWER ✔✔adjusted sales prices of
comparable property
theory substitution
cost approach - 🧠 ANSWER ✔✔cost/value of vacant land
cost to construct
accrued depreciation
theory of substitution
income approach - 🧠 ANSWER ✔✔present value of anticipated income
theory of anticipation
1. ratio models
2. discounted cash flow - 🧠 ANSWER ✔✔two types of income methods
1. depreciation
2. mortgage interest
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Answers | 100% Solved
1
potential gross income - 🧠 ANSWER ✔✔the amount that would be collected
if the property was fully occupied at market rents
miscellaneous income - 🧠 ANSWER ✔✔the amount received from services
associated with a property such as laundry, parking, or storage
vacancy and collection loss - 🧠 ANSWER ✔✔the amount of expected loses
from vacancies and bad debts
effective gross income - 🧠 ANSWER ✔✔potential gross income minus
vacancy and collection
operating expenses - 🧠 ANSWER ✔✔expenses associated with the
operation of the property
net operating income - 🧠 ANSWER ✔✔effective gross income minus
operating expenses
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,depreciation - 🧠 ANSWER ✔✔allowable amount that can be deducted
annually as an expense under IRS codes
2
taxable income - 🧠 ANSWER ✔✔net operating income minus depreciation
minus interest payments
before tax cash flow - 🧠 ANSWER ✔✔the net amount of all revenues and
expenses prior to tax considerations
after tax cash flow - 🧠 ANSWER ✔✔before tax cash flow minus income
taxes or plus allowable income tax losses
capital reserves - 🧠 ANSWER ✔✔amount set aside each year for replacing
costly short-lived items such as roofing, appliances, and mechanical
equipment
mill rate - 🧠 ANSWER ✔✔represents $1 of tax assessment per $1,000 of
assessed property value
terminal cap rate - 🧠 ANSWER ✔✔the cap rate we except when we sell the
property
amortization - 🧠 ANSWER ✔✔this is the number years over which the loan
will fully amortize
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,term - 🧠 ANSWER ✔✔when the loan is actually due
lease - 🧠 ANSWER ✔✔legal contract between tenant and owner for use
3
and possession of real estate
lease - 🧠 ANSWER ✔✔the "engines" that "drive" values and returns
contain elements of a valid contract to be enforceable such as competent
parties, legal use, provide something of value - 🧠 ANSWER ✔✔essential
elements of lease
class a property - 🧠 ANSWER ✔✔commands highest rents because they
are the most prestigious in their tenancy, location, and overall desirability
usually newer structures
typically owned by institutional investors
class b property - 🧠 ANSWER ✔✔rents usually less than class a buildings
because of a less desirable location, fewer amenities, less impressive
lobbies, elevators, etc
class c property - 🧠 ANSWER ✔✔usually once class a or b are older and
reasonable well maintained but are below current standards for one or
more reasons
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, 1. sales comparison
2. cost approach
4
3. income approach - 🧠 ANSWER ✔✔three approaches to value
sales comparison approach - 🧠 ANSWER ✔✔adjusted sales prices of
comparable property
theory substitution
cost approach - 🧠 ANSWER ✔✔cost/value of vacant land
cost to construct
accrued depreciation
theory of substitution
income approach - 🧠 ANSWER ✔✔present value of anticipated income
theory of anticipation
1. ratio models
2. discounted cash flow - 🧠 ANSWER ✔✔two types of income methods
1. depreciation
2. mortgage interest
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
