Texas Principles of Real Estate - Part 2: Exam Questions and Answers 2024-2025, Exams of Real Estate Management

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Texas Principles of Real Estate - Part 2

Exam Questions and Answers 2024-

The liquidation of a financial obligation on an installment basis is referred to as...? Buy-down Discounting Amortization None of the above - Answer: Amortization

Which of the following is used by lenders to increase the lender's yield on the loan without increasing the annual interest rate...? Amortization Loan discount points Balloon payments Reduced broker fees - Answer: Loan discount points The term "point" is slang: 0.1% 1% 2% 10% - Answer: 1% In an improper fraction, the ............... is larger than the denominator? Numerator Root Decimal Integer - Answer: Numerator 5/4 is an example of a/an...? Integrated fraction Root fraction Improper fraction Proper fraction - Answer: Improper fraction

Improper fractions are always greater than...?

1 - Answer: 1 1-1/4 is an example of a...? Proper fraction Mixed number Numerator Denominator - Answer: Mixed number 8/7 is an example of a/an...? Improper fraction Integrated fraction Root fraction Proper fraction - Answer: Improper fraction 8/5 is equal to...?

5.0 - Answer: 1.

The bottom number in a written fraction is called the...? Denominator Numerator Root Integer - Answer: Denominator Which of the following loan terms will yield the highest monthly mortgage payment...? 10 years 15 years 20 years 30 years - Answer: 10 years The liquidation of a financial obligation on an installment basis is referred to as...? Buy-down Discounting Amortization None of the above - Answer: Amortization Which of the following is used by lenders to increase the lender's yield on the loan without increasing the annual interest rate...? Amortization Loan discount points Balloon payments Reduced broker fees - Answer: Loan discount points

If a lender charges a 1 point origination fee, what will be the cost of the origination fee...? 0.1% of the loan 1% of the loan 2% of the loan 10% of the loan - Answer: 1% of the loan A fibrous mineral found in many building materials that when improperly disturbed, can cause serious lung diseases is known as...? Asbestos Radon UFFI Mold - Answer: Asbestos A quality of some asbestos that causes it to crumble, allowing toxic particles to escape into the air and lodge in people's lungs is known as...? Malleable Expandable Friable Contracting - Answer: Friable A type of foam containing formaldehyde, a gaseous compound used for home insulating until the early 1980's, is known as...? Polystyrene Insulation

Extruded Polystyrene Insulation Mineral Wool Insulation Urea-Formaldehyde Foam Insulation - Answer: Urea-Formaldehyde Foam Insulation Asbestos is primarily harmful when it is disturbed...? T (True) F (False) - Answer: T (True) Mold growth is most associated with...? Water damage Proper ventilation Asbestos Carbon monoxide - Answer: Water damage Which of the following loan terms will yield the lowest monthly mortgage payment...? 10 years 15 years 20 years 30 years - Answer: 30 years The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale is referred to as...?

Assessed Value Market Value Investment Value Insured Value - Answer: Market Value How much experience is needed to become a real estate appraiser trainee...? No experience is needed At least 6 months working under a licensed appraiser At least 1 year working under a licensed appraiser At least 2 years working under a licensed appraiser - Answer: No experience is needed An auto-repair shop that exists in a newly developed residential neighborhood is an example of a...? Non-conforming Use Conforming Use Spot Use Variance Use - Answer: Non-conforming Use A permitted deviation from specific requirements of a zoning ordinance because of the special hardship to a property owner is known as a...? Variance Reconsideration Special Use Conforming Use - Answer: Variance

The use of lead-based paint in residential properties was banned in what year...? 1978 1964 1968 1970 - Answer: 1978 Water damage, combined with improper ventilation can lead to which of the following...? Mold Radon Carbon Monoxide Carbon Dioxide - Answer: Mold Lead can be found in which of the following...? Plumbing pipes Insulation Floor tiles All of the above - Answer: Plumbing pipes Zoning is an example of...? Police Power Eminent Domain Escheat Condemnation - Answer: Police Power

Which of the following imposes height restrictions on buildings...? Zoning Building permits Certificate of Occupancy All of the above - Answer: Zoning An auto-repair shop that exists in a newly developed residential neighborhood is an example of a...? Non-conforming Use Conforming Use Spot Use Variance Use - Answer: Non-conforming Use If an owner is experiencing economic hardship due to the limitations on his property, a variance may be granted for which of the following...? A reduced setback requirement A less stringent high limitation An increased lot coverage allowance All of the above - Answer: All of the above Lead can be found in which of the following...? Plumbing pipes Insulation Floor tiles

All of the above - Answer: Plumbing pipes A branch of real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties is known as...? Real Estate Development Property Management Real Estate Investing Real Estate Sales - Answer: Property Management Which of the following is a designation earned by property managers...? Certified Property Manager Certified Project Manager Accredited Manager All of the above - Answer: Certified Property Manager A procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms is known as...? REO Short Sale Foreclosure Buy-back - Answer: Foreclosure If a property is not sold at a foreclosure auction, the property will become a...? REO Short Sale

Repossessed Property Investment Property - Answer: REO If a property is sold as a short sale, the owner will not receive any equity...? T (True) F (False) - Answer: T (True) A person who manages properties for an owner as the owner's agent is referred to as a...? Property Manager Real Estate Broker On-site Manager Apartment Locator - Answer: Property Manager Which of the following is a primary goal of a property manager...? Maximize the return on investment for the property owner Create a database of potential tenants Minimize the number of repairs done on the property Spending the operating budget set aside by the property owner - Answer: Minimize the number of repairs done on the property Individuals primarily invest in real estate for cash flow and....? Appreciation Depreciation Active participation

Scalability - Answer: Appreciation A non-judicial foreclosure typically occurs when there is a...? Deed of trust Mortgage Short sale REO - Answer: Deed of trust Which of the following is used to determine the amount of equity in a distressed property...? BPO Comparative market analysis Property evaluation All of the above - Answer: BPO A transaction in which the sale proceeds fall short of the balance owed on the property is known as a...? Short Sale REO Foreclosure Buy-down - Answer: Short Sale If a property owner is behind on their mortgage, their property may ultimately result in which of the following...? REO

Short Sale Foreclosure All of the above - Answer: All of the above A non-judicial foreclosure typically occurs when there is a...? Deed of trust Mortgage Short sale REO - Answer: Deed of trust Who becomes the owner of a property after it becomes an REO...? The lender The seller The State The broker - Answer: The lender Real estate licensees who specialize in commercial real estate must be have an understanding of which of the following...? Real estate finance BPOs Financing available for first-time homebuyers All of the above - Answer: Real estate finance Real estate investments fall into two categories, real property and...? Personal property

Leverage Tax shelters Real estate securities - Answer: Real estate securities A real estate security can include which of the following...? Mortgage notes Single family homes Shopping centers Self storage facilities - Answer: Mortgage notes Why has real estate traditionally been a good investment...? Growth in property values have not outpaced inflation Property values have depreciated over time Growth in property values have outpaced inflation Growth in property values has been equal to inflation - Answer: Growth in property values have outpaced inflation A property with a higher intrinsic value can often demand a higher...? Sales price LTV Yield Interest rate - Answer: Sales price Which of the following is an advantage to investing in real estate...? The use of borrowed funds to purchase investment properties

Investment properties can serve as tax shelters Growth in property values typically outpaces inflation All of the above - Answer: All of the above The total amount of money remaining after all expenditures have been paid, including the taxes, operating costs, and mortgage payments is known as...? Gross income Cash flow Effective gross income Capital gain - Answer: Cash flow The property's market value minus any debts is known as...? Equity Leverage Effective gross income Net operating income - Answer: Equity The amount that a landlord can charge for rent is affected by which of the following...? The location of the property The amenities offered The condition of the property All of the above - Answer: All of the above

The use of a lower amount of leverage results in .............................. risk to the investor? Higher Significantly higher Lower No - Answer: Lower The cash flow a property generates is the result of which of the following...? The amount of rent received The amount spent on expenses to operate the property The amount paid to service the debt on the property All of the above - Answer: All of the above Cash received in a tax-deferred exchange is known as...? Levy Gains Boot Leverage - Answer: Boot The cost to acquire a property, plus the cost of the physical improvements, minus the depreciation claimed as a tax deduction is equal to the...? Adjusted basis Capital gain Base investment Leveraged gain - Answer: Adjusted basis

An investor purchased a property for $100,000. Over the course of 3 years, the investor built $5,000 worth of capital improvements. If the investor wrote off $8,000 in depreciation, what is the adjusted basis...? $92, $97, $105, $113,000 - Answer: $97, The new property in a 1031 exchange is referred to as the...? Replacement property Relinquished property Deferred property Capital property - Answer: Replacement property A syndicate real estate investor enjoys the same tax benefits as a direct ownership investor...? T (True) F (False) - Answer: T (True) A REIT is not subject to a corporate income tax if at least ......... of its income is distributed to shareholders? 10% (percent) 50% (percent) 80% (percent)

90% (percent) - Answer: 90% (percent) A mortgage REIT's primarily source of income are from mortgage interest and...? Mortgage principal The sale of property Mortgage origination fees The cash flow from property - Answer: Mortgage origination fees An increase in value is known as...? Appreciation Depreciation Demand Leverage - Answer: Appreciation Investing in real property includes which of the following...? Cash flow Appreciation Tax savings All of the above - Answer: All of the above The use of a mortgage when buying an investment property is an example of...? Leverage Depreciation Equity build-up Negative amortization - Answer: Leverage

The amount of decrease in value of an asset that is allowed in computing the value of the property for tax purposes is known as...? Depreciation Appreciation Inflation Deflation - Answer: Depreciation A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement is known as...? Straight line depreciation Variable depreciation Dynamic depreciation Fixed-rate depreciation - Answer: Straight line depreciation An owner who enters into a lease agreement with a tenant is referred to as a...? Lessor Lessee Grantor Grantee - Answer: Lessor Renting a property, rather than owning a property, may benefit an individual who is...? Looking for a tax shelter

Looking to take advantage of appreciating home prices Looking for more flexibility in where they live All of the above - Answer: Looking for more flexibility in where they live A lease is found in which of the following types of real property...? Residential properties Industrial properties Commercial properties All of the above - Answer: All of the above A tenant's right to occupy real estate during the term of the lease is known as a...? Lease Fee Estate Life Estate Leasehold Estate Fee Simple Estate - Answer: Leasehold Estate An interest in land by virtue of a contract for the possession of them for a definite and limited period of time is known as a/an...? Fee Simple Estate Estate for Years Freehold Estate Life Estate - Answer: Estate for Years A lease that automatically renews for successive periods unless terminated by either party is known as a...?

Periodic Tenancy Tenancy at Will Recurring Lease Term Lease - Answer: Periodic Tenancy A holdover tenancy cannot extend beyond how many months...? 1 month 3 months 6 months 12 months - Answer: 12 months According to HUD, what is a reasonable occupancy standard per bedroom...? 1 occupant 2 occupants 3 occupants 4 occupants - Answer: 2 occupants The Texas Property Code sets the maximum number of adults occupying an apartment at ........ the number of bedrooms in the apartment? 1x 2x 3x 4x - Answer: 3x

Which of the following is used as a means of security by the landlord for any physical damage done by the tenant to the property...? Security deposit Down payment Origination fee Principal fee - Answer: Security deposit A lease in which the lessor pays all costs of operating and maintaining the property and real property taxes is known as a...? Net lease Gross lease Ground lease Graduated lease - Answer: Gross lease A lease on a property, the rental for which is determined by amount of business done by the lessee is referred to as a....? Graduated lease Gross lease Percentage lease Net lease - Answer: Percentage lease An agreement for the use of land only, sometimes secured by improvements placed on the land by the user is known as a...? Gross lease Net lease

Percentage lease Ground lease - Answer: Ground lease XYZ company is looking to rent an entire office building for the long-term. What type of lease may the building owner most likely offer to XYZ company...? Triple net lease Gross lease Ground lease Percentage lease - Answer: Triple net lease A tenant is also referred to as a...? Lessee Lessor Grantor Grantee - Answer: Lessee A contract between an owner and tenant, setting forth conditions upon which the tenant may occupy and use the property and the term of the occupancy is referred to as a...? Lease Purchase contract Deed Listing contract - Answer: Lease

If an individual continues to occupy a property after the property was sold at a foreclosure sale, that individual is said to occupy the property as a...? Tenancy at sufferance Tenancy at will Periodic tenancy Eminent domain - Answer: Tenancy at sufferance A valid lease must include which of the following...? Consideration Signature of the real estate broker Acceptance from the property management company All of the above - Answer: Consideration A lease requiring a lessee to pay charges against the property such as taxes, insurance and maintenance costs in addition to rental payments is known as a...? Net lease Gross lease Ground lease Graduated lease - Answer: Net lease Leases with a term of greater than ......... must be in writing to be enforceable? 1 year 6 months 2 years 3 years - Answer: 1 year

If a tenant decides to rent out a second bedroom in their apartment to a new roommate, the roommate's lease is considered a/an...? Sub-lease Assigned lease Tenancy at sufferance Term lease - Answer: Sub-lease A branch of real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties is known as...? Property sales Property management Real estate investing Real estate marketing - Answer: Property management A person who manages properties for an owner, as the owner's agent, is referred to as a...? Engineer Real estate broker Property manager Apartment locator - Answer: Property manager When is a property manager required to have a real estate license...? When the property manager leases vacant apartments When the property manager performs preventative maintenance