CMPS Real Estate Investment Planning 4

Question 1

A value-add real estate strategy typically involves:

Accepted Answer

Acquiring underperforming properties and increasing NOI through improvements or better management

Answer

Buying stabilized trophy assets in primary markets

Answer

Purchasing properties with NNN leases to ensure passive income

Answer

Investing in REITs for diversified exposure

Question 2

Under IRS passive activity rules, rental real estate losses can offset ordinary income up to $25,000 per year only if the taxpayer:

Accepted Answer

Actively participates and has MAGI below $100,000

Answer

Materially participates and has no other passive income

Answer

Is a licensed real estate professional

Answer

Holds the property in an LLC taxed as a partnership

Question 3

A property is purchased for $400,000 and sold 5 years later for $520,000. Ignoring depreciation recapture, the long-term capital gain is:

Accepted Answer

$120,000

Answer

$80,000

Answer

$400,000

Answer

$520,000

Question 4

Which type of NNN lease structure makes the tenant responsible for property taxes, insurance, AND maintenance expenses?

Accepted Answer

Triple net (NNN) lease

Answer

Gross lease

Answer

Modified gross lease

Answer

Double net (NN) lease

Question 5

An investor financing a multi-family property wants to minimize the impact of rising interest rates on long-term cash flow. The best strategy is to:

Accepted Answer

Lock in a long-term fixed-rate mortgage at current rates

Answer

Use a floating-rate bridge loan

Answer

Maximize leverage with an interest-only ARM

Answer

Refinance annually to capture lower short-term rates

Question 6

Which property type is generally considered most resilient during economic downturns due to consistent consumer demand?

Accepted Answer

Grocery-anchored retail strip centers

Answer

Luxury office towers

Answer

Regional malls

Answer

Hotel properties

Question 7

Which term describes the additional yield an investor requires above the risk-free rate to compensate for real estate investment risk?

Accepted Answer

Risk premium

Answer

Cap rate spread

Answer

Equity dividend rate

Answer

Yield to maturity