Deck 12: Commercial Building and Farm Loans

Question 1

While they require very specialized information, farm loans are based on the same three legs as all mortgage loans, which are:

A) a creditworthy borrower, adequate collateral, good crops
B) both crops and livestock, a creditworthy borrower, adequate income
C) income sufficient to repay the loan, assured good weather, a creditworthy borrower
D) creditworthy borrower, adequate collateral, income sufficient to repay the loan

Answer 1

creditworthy borrower, adequate collateral, income sufficient to repay the loan

Question 2

The important reason that shopping center land loads encourage promotions of their tenant's sales is that:

A) it fosters better relations
B) shopping center leases are usually based on a percentage of the tenant's sales
C) it attracts better tenants
D) it encourages faster lease-up

Answer 2

shopping center leases are usually based on a percentage of the tenant's sales

Question 3

Depreciation allowed for tax purposes is a percentage of the:

A) total value of the land and buildings
B) equity interest in the building
C) total value of the building
D) equity interest in the land

Answer 3

total value of the building

Question 4

In the financing of special purpose buildings, if a manufacturer agrees to accept contingent responsibility for repayment of a loan made to a dealership, one way this can be accomplished is for the manufacturer to:

A) agree to endorse the note
B) agree to buy out the dealer
C) re-write the sales agreement
D) all of the above

Question 5

Which of the following is true of percentage leases?

A) It is the dominant method to lease warehouse space
B) The percentage charged varies with type of business
C) Shopping centers have a standard percentage rate which is the same for all tenants
D) All percentage leases allow for an annual change in the percentage charged

Question 6

A stabilized income property is one in which the building has a longer operating history and is usually has a _____% or higher occupancy and is for sale by its current owner for varying reasons.

A) 75
B) 80
C) 85
D) 90

Question 7

The least amount of management is needed for operating:

A) a warehouse
B) a shopping center
C) an office building
D) an apartment

Question 8

Multifamily housing must comply with a 1988 amendment to Fair Housing Act that adds which of the following to the prohibition against discrimination?

A) Pets and other personality
B) Elderly persons
C) Citizenship and employment
D) Familial status and handicapped

Question 9

When seeking funding which of the following is not one kinds of information that a religious institution facilities lender might feel was key?

A) Minimum of three years average adult worship attendance.
B) Annual contributions from each of the largest 15 donors for the previous year (the names of the donors are not usually required).
C) Annual salaries/income of ministerial staff
D) Cash on hand in building fund

Question 10

A "net lease" means which of the following?

A) The tenant pays a net rent after deducting certain listed operating expenses
B) The tenant pays rent based only on the net interior space under lease
C) The tenant pays for all of its own services
D) The tenant pays all maintenance and building operating expenses plus insurance and taxes on the building

Question 11

One of the better ways to assure success with a high rise office building investment is to:

A) pick a suit able location
B) prelease as much space as possible, preferably to a major tenant
C) obtain the best possible financing
D) require that the building contractor be bonded

Question 12

In analysis of a property's income and expense, the calculation of each item as a percentage of the gross operating income helps an analyst to:

A) add paperwork to the analysis
B) more accurately compare income and costs with those of other similar properties
C) compare income and expense with each other
D) determine if a rent increase is needed.