REA Development & Feasibility Analysis 3

Question 1

What does 'floor area ratio' (FAR) determine in real estate development?

Accepted Answer

The maximum total building square footage permitted relative to the lot size

Answer

The ratio of leasable area to total gross building area

Answer

The percentage of a site that can be covered by impervious surfaces

Answer

The maximum height of a building expressed as a multiple of the street width

Question 2

What is a 'tax increment financing' (TIF) district and how does it benefit real estate developers?

Accepted Answer

A public financing mechanism that captures future property tax growth from new development to fund infrastructure costs

Answer

A state program that reduces property taxes for developments in designated enterprise zones

Answer

A federal grant program providing subsidies for affordable housing development

Answer

A special assessment district that imposes additional taxes on properties to fund public improvements

Question 3

What is the primary challenge of developing in an 'opportunity zone' under the US Tax Cuts and Jobs Act?

Accepted Answer

Capital must be deployed within strict timelines and substantial improvement requirements must be met to qualify for tax benefits

Answer

Properties in opportunity zones are ineligible for conventional financing

Answer

Developments must set aside a minimum percentage of units as affordable housing

Answer

Local zoning in opportunity zones often restricts higher-density development

Question 4

What does 'entitlement' refer to in real estate development?

Accepted Answer

The government approvals required to develop a property for a specific use, including rezoning and permits

Answer

The legal right to use a neighboring property's land for access or utilities

Answer

The ownership interest in a property conveyed through a deed

Answer

The developer's contractual right to purchase a site upon meeting specified conditions

Question 5

What is a 'cost segregation study' and why is it valuable to real estate developers?

Accepted Answer

An engineering analysis that reclassifies building components to shorter depreciation lives, accelerating tax deductions

Answer

A study that allocates total project costs between land, building, and tenant improvements for accounting purposes

Answer

An analysis comparing construction cost estimates from multiple general contractors

Answer

A feasibility study evaluating the cost of remediating environmental contamination on a development site

Question 6

In development pro forma analysis, what is the difference between 'gross' and 'net' rentable area?

Accepted Answer

Gross area is the total building area including common spaces; net rentable area excludes common areas and is the basis for tenant leases

Answer

Gross area is the leasable space after vacancy; net rentable area includes all leased and vacant space

Answer

Gross area includes outdoor areas and parking; net area includes only enclosed interior space

Answer

Gross area is calculated using exterior dimensions; net area uses interior dimensions only