REA Cheat Sheet 2026

The 30 highest-yield REA facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is an appraisal report? → A document detailing methods and findings in property valuation
2. How does interest rate fluctuation affect real estate market analysis? → By determining property prices
3. What is the cost approach in property valuation? → Adding land value and building replacement costs, less depreciation
4. What is the primary objective of real estate portfolio diversification? → Reducing overall risk by spreading investments across uncorrelated assets
5. What is 'construction contingency' in a development budget? → A reserve percentage added to hard costs to cover unforeseen construction expenses
6. What is the purpose of a 'hold-sell analysis' in real estate portfolio management? → Comparing the NPV of holding a property against the net proceeds from selling it
7. What key financial metrics should be considered in real estate investment analysis? → Only cash flow
8. What does 'leasing velocity' measure in commercial real estate operations? → The pace at which vacant space is being signed to new leases over a given period
9. Qualified Improvement Property (QIP) placed in service after December 31, 2017 has a MACRS recovery period of: → 15 years, making it eligible for bonus depreciation after the CARES Act correction
10. In real estate risk analysis, what is 'rollover risk'? → The risk that leases expire and cannot be renewed at current or higher rents
11. What is the income approach in property valuation? → By evaluating the income the property generates
12. What are environmental regulations in real estate? → To ensure properties are developed in an environmentally responsible manner
13. What is internal rate of return (IRR)? → The rate that makes NPV equal to zero, assessing profitability
14. Why is debt service coverage ratio (DSCR) important in real estate analysis? → To track rent payments
15. A cost segregation study benefits a real estate investor primarily by: → Reclassifying building components into shorter depreciable lives to accelerate deductions
16. What is the primary purpose of a Phase I Environmental Site Assessment in real estate due diligence? → To identify potential environmental contamination on a property
17. What is the sales comparison approach? → Comparing the sale prices of similar properties
18. What is the 'equity dividend rate' (EDR) in real estate investment analysis? → Annual pre-tax cash flow divided by the equity invested, measuring cash return on equity
19. An asset manager implements a 'lease-up' strategy on a recently acquired office building. What is the primary goal? → Filling vacant space with creditworthy tenants to stabilize income and increase value
20. What is the purpose of a 'zoning compliance letter' obtained during due diligence? → Confirms the property's current use is permitted and any nonconforming status
21. An analyst is reviewing a lease with a 'percentage rent' clause. When is additional rent triggered? → When tenant sales exceed a specified natural breakpoint
22. What does 'same-store NOI growth' measure in a REIT's operating performance? → NOI growth from properties owned throughout both the current and prior comparison period
23. Which asset management strategy involves acquiring underperforming properties, improving them, and selling at a higher valuation? → Value-add strategy
24. Long-term capital gains on the sale of investment real estate held more than one year are taxed at: → Preferential rates of 0%, 15%, or 20% based on the taxpayer's taxable income
25. In a real estate capital stack, which position carries the lowest risk and why? → Senior debt, because it has priority claim on cash flows and proceeds in foreclosure
26. What is the significance of the National Association of Realtors (NAR) Code of Ethics? → To set ethical standards for real estate professionals
27. In multifamily property operations, what is 'economic vacancy loss'? → Income lost due to physical vacancies, non-payment, and rent concessions combined
28. Which document provides a buyer with the legal description, easements, and encumbrances on a property? → Title commitment
29. Why is location an important factor in property valuation? → To affect demand and pricing
30. Unrecaptured Section 1250 gain on the sale of depreciable real property is subject to a maximum federal tax rate of: → 25%