Question 1

Which of the following costs should NOT be included in a net present value analysis of a land development project?

Accepted Answer

A)  Land purchase price 
B)  Property tax 
C)  General overhead such as personnel costs 
D)  Developer's profit 
A)  Land purchase price 
B)  Property tax 
C)  General overhead such as personnel costs 
D)  Developer's profit

Question 2

$\begin{array} { lr } 
\text{Tatal sales revenue}&\text { \$ 10,000,000 } \ 
\text{Less: Develapment cost}&\text { 6,000,000 } \ 
\text{Less: Land asking price}& \underline{1,000,000} \
\text{Patential gross profit}&\$ 3,000,000 \ 
\text{Less: Admin., legal, commissians, etc.}&\underline{1,500,000} \ 
\text{Patential net profit}&\underline{\$ 1,500,000} \ 
 \end{array}$
-Refer to the information in the previous question. You have been advised that sales revenues may be 10 percent lower and/or development costs may be 10 percent higher. Performing a sensitivity analysis, you conclude:

Accepted Answer

A)  A 10 percent decrease in sales revenues would have a bigger impact on returns than a 10 percent increase in development costs 
B)  A 10 percent increase in development costs would have a bigger impact on returns than a 10 percent decrease in sales revenues 
C)  A 10 percent increase in development costs and a 10 percent decrease in sales revenues would have opposite impacts on returns, canceling each other out and having no impact on returns 
D)  Both factors would have such a small impact, that there is no reason to be concerned about either a 10 percent increase in development costs or a 10 percent decrease in sales revenues 
A)  A 10 percent decrease in sales revenues would have a bigger impact on returns than a 10 percent increase in development costs 
B)  A 10 percent increase in development costs would have a bigger impact on returns than a 10 percent decrease in sales revenues 
C)  A 10 percent increase in development costs and a 10 percent decrease in sales revenues would have opposite impacts on returns, canceling each other out and having no impact on returns 
D)  Both factors would have such a small impact, that there is no reason to be concerned about either a 10 percent increase in development costs or a 10 percent decrease in sales revenues

Question 3

Which of the following is FALSE regarding the release price?

Accepted Answer

A)  It is usually calculated to pay off the loan when the last lot is sold 
B)  It is usually calculated to pay off the loan before the last lot is sold 
C)  Increasing the release price usually lowers the lender's risk 
D)  Increasing the release price is likely to lower the investor's initial cash flow 
A)  It is usually calculated to pay off the loan when the last lot is sold 
B)  It is usually calculated to pay off the loan before the last lot is sold 
C)  Increasing the release price usually lowers the lender's risk 
D)  Increasing the release price is likely to lower the investor's initial cash flow

Question 4

An option contract does not preclude the landowner from selling the property to someone else after the expiration date.

Accepted Answer

A) True 
 B)False

Question 5

Usually, a lender does not require a developer to submit a schedule of estimated cash flows prior to approving a land development loan.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following might impact the density of housing in a land development project?

Accepted Answer

A)  The price paid for the land by the developer 
B)  The terrain of the land 
C)  The target market's preferences regarding density 
D)  All of the above 
A)  The price paid for the land by the developer 
B)  The terrain of the land 
C)  The target market's preferences regarding density 
D)  All of the above

Question 7

The amount to be paid to the lender from each lot sale is included in the:

Accepted Answer

A)  Release schedule 
B)  Development agreement 
C)  Cost breakdowns 
D)  Subcontracts 
A)  Release schedule 
B)  Development agreement 
C)  Cost breakdowns 
D)  Subcontracts

Question 8

The release schedule refers to a schedule of expiring leases for existing tenants.

Accepted Answer

A) True 
 B)False

Question 9

In order to obtain a land development loan, the developer is required usually to purchase title insurance.

Accepted Answer

A) True 
 B)False

Question 10

The release price is the dollar amount of a loan that must be repaid when a lot is sold.

Accepted Answer

A) True 
 B)False

Question 11

In most instances, a developer's repayment rate is set so that the development loan will be repaid at the exact point that 100% of total project revenue is realized.

Accepted Answer

A) True 
 B)False

Which of the following costs should NOT be included in a net present value analysis of a land development project?

Which of the following is FALSE regarding the release price?

An option contract does not preclude the landowner from selling the property to someone else after the expiration date.

Usually, a lender does not require a developer to submit a schedule of estimated cash flows prior to approving a land development loan.

Which of the following might impact the density of housing in a land development project?

The amount to be paid to the lender from each lot sale is included in the:

The release schedule refers to a schedule of expiring leases for existing tenants.

In order to obtain a land development loan, the developer is required usually to purchase title insurance.

The release price is the dollar amount of a loan that must be repaid when a lot is sold.

In most instances, a developer's repayment rate is set so that the development loan will be repaid at the exact point that 100% of total project revenue is realized.

Real Estate Investment: Basic Legal Concepts

Real Estate Financing: Notes and Mortgages

Mortgage Loan Foundations: the Time Value of Money

Fixed Interest Rate Mortgage Loans

Adjustable and Floating Rate Mortgage Loans

Mortgages: Additional Concepts, Analysis, and Applications

Single Family Housing: Pricing, Investment, and Tax Considerations

Underwriting and Financing Residential Properties

Income-Producing Properties: Leases, Rents, and the Market for Space

Valuation of Income Properties: Appraisal and the Market for Capital

Investment Analysis and Taxation of Income Properties

Financial Leverage and Financing Alternatives

Risk Analysis

Disposition and Renovation of Income Properties

Financing Corporate Real Estate

Financing Project Development

Structuring Real Estate Investments: Organizational Forms and Joint Ventures

The Secondary Mortgage Market: Pass-Through Securities

The Secondary Mortgage Market: Cmos and Derivative Securities

Real Estate Investment Trusts Reits

Real Estate Investment Performance and Portfolio Considerations

Real Estate Investment Funds: Structure, Performance

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Exam 17: Financing Land Development Projects

Which of the following costs should NOT be included in a net present value analysis of a land development project?

Which of the following is FALSE regarding the release price?

An option contract does not preclude the landowner from selling the property to someone else after the expiration date.

Usually, a lender does not require a developer to submit a schedule of estimated cash flows prior to approving a land development loan.

Which of the following might impact the density of housing in a land development project?

The amount to be paid to the lender from each lot sale is included in the:

The release schedule refers to a schedule of expiring leases for existing tenants.

In order to obtain a land development loan, the developer is required usually to purchase title insurance.

The release price is the dollar amount of a loan that must be repaid when a lot is sold.

In most instances, a developer's repayment rate is set so that the development loan will be repaid at the exact point that 100% of total project revenue is realized.

Real Estate Investment: Basic Legal Concepts

Real Estate Financing: Notes and Mortgages

Mortgage Loan Foundations: the Time Value of Money

Fixed Interest Rate Mortgage Loans

Adjustable and Floating Rate Mortgage Loans

Mortgages: Additional Concepts, Analysis, and Applications

Single Family Housing: Pricing, Investment, and Tax Considerations

Underwriting and Financing Residential Properties

Income-Producing Properties: Leases, Rents, and the Market for Space

Valuation of Income Properties: Appraisal and the Market for Capital

Investment Analysis and Taxation of Income Properties

Financial Leverage and Financing Alternatives

Risk Analysis

Disposition and Renovation of Income Properties

Financing Corporate Real Estate

Financing Project Development

Structuring Real Estate Investments: Organizational Forms and Joint Ventures

The Secondary Mortgage Market: Pass-Through Securities

The Secondary Mortgage Market: Cmos and Derivative Securities

Real Estate Investment Trusts Reits

Real Estate Investment Performance and Portfolio Considerations

Real Estate Investment Funds: Structure, Performance

Filters