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TEXAS SAE REAL ESTATE INVESTMENT EXAM 2025 |
ALL QUESTIONS AND CORRECT ANSWERS WITH
EXPLANATIONS | GRADED A+ | VERIFIED ANSWERS |
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What is the trustee's role when a deed of trust is used to secure property for a loan? ---------CORRECT ANSWER-----------------To hold legal title to the property on behalf of the beneficiary until the loan is repaid (When a deed of trust is used in a title theory state, the trustee holds legal title to the property on behalf of the beneficiary.) Your client hates the fact that out of her $1,027 monthly payment, more than $900 is going toward interest. What do you tell her? ---------CORRECT ANSWER-----------------"That's amortization for you." Lizzie's on the hunt for an older, single-family house she can rehab and then put back on the market. If she has to rent the place for a while, so be it, but her ultimate goal is to sell the place for a profit. What type of investment opportunity is Lizzie considering? ---------CORRECT ANSWER-- ---------------A fixer-upper The introduction of a development into an area can impact ____________, which, in turn, can have an effect on local businesses. ---------CORRECT ANSWER-----------------Traffic patterns Approximately how much would an estate have to be worth to be subject to estate tax? ---------CORRECT ANSWER-----------------$11 million
Investors may be allowed to deduct operating expenses, real estate taxes, mortgage interest, and what else? ---------CORRECT ANSWER----------------
- Depreciation Under which of the following real estate submarkets would an investment in public storage facilities fall? ---------CORRECT ANSWER----------------- Special use (The special use submarket also includes entertainment venues (like theaters and theme parks), hotels and motels, golf courses, medical facilities, and mini warehouses.) When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work? ---------CORRECT ANSWER-----------------Competition Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment? ---------CORRECT ANSWER----------------- 2048 Which ADA title prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities? ---------CORRECT ANSWER------------- ----Title I (Title I deals with the employment of qualified individuals with disabilities in the areas of job application procedures, hiring, firing, or advancement, compensation, job training, and other employment terms, conditions, and privileges.)
Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today? ---------CORRECT ANSWER-----------------Cost In addition to the two anchor tenants, how many tenants does a community shopping center normally have? ---------CORRECT ANSWER----------------- 15 - 40 Roberto has a mortgage on his investment property, but allows the property to fall into disrepair while his focus is on other properties he owns. Which of these is a possible consequence of this action? ---------CORRECT ANSWER-----------------The lender can place Roberto's loan in default. Your client, Gabriel, has invested in a rental property. He looks at his property's operating statement, tweaks the numbers based on his knowledge of the market, and re-works the statement. Gabriel has created ______. ---------CORRECT ANSWER-----------------A pro-forma statement Remember that Gabriel is changing the numbers of the operating statement based on his knowledge of the market. Which of the following terms refers to the process of combining separate adjacent parcels into one piece of land? ---------CORRECT ANSWER-------- ---------Assemblage Beth, a condominium owner, wants to sell her condominium. What rule might apply before she is able to do this? ---------CORRECT ANSWER------- ----------She must allow the board of directors the option to purchase the condominium when it's placed for sale, if the condominium agreement includes the right of first refusal.
Which of these terms can be defined as what a buyer has paid for a property and what the seller has accepted? ---------CORRECT ANSWER---- -------------Price (Price is the actual amount that a buyer pays for a property. It may be the same as the market value, or it may not.) Ricky Nubbins is three months behind in his rent and has received several reminders from the landlord that the rent is past due. Unbeknownst to Ricky, the landlord has begun working through proper channels to legally end Ricky's lease before the contract end date. The landlord is terminating his lease through ______. ---------CORRECT ANSWER----------------- Eviction Xavier and Juanita Jenkins want to make a few improvements to their leased apartment. The couple would like to rip up the carpet in the living room and have the hardwood floors underneath restored. Which of the following statements about the improvements is true? ---------CORRECT ANSWER-----------------Xavier and Juanita need to get the landlord's permission before they make any improvements to the property. Sondra thinks the new business contract she's signed with her business partner is valid. Both parties are legally competent, the purpose is a business transaction so it's a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered? --------- CORRECT ANSWER-----------------Whether consent was voluntary The only element Sondra hasn't considered is whether the consent to enter into the contract was voluntarily given. Only real estate contracts have to be in writing, and parties are legally competent to enter into contracts from the age of 18.
Marshall is your investor client who is interested in purchasing an apartment building. You've identified several properties to show him. Since he's planning to remodel and add more units to the property he ultimately purchases, which of the following is something you should mention? --------- CORRECT ANSWER-----------------Improvements increase assessed value and will increase property taxes. Property taxes = assessed value × tax rate. Improvements will increase the property's assessed value, so property taxes will also increase. Which of the following statements describes an on-site residential property manager? ---------CORRECT ANSWER-----------------Manages the day-to- day operations of a single property There are two primary types of property managers—those who work on- site and those who work off-site, often working from a property management office that manages multiple properties. Residential lease terms are seldom negotiated. Which of the following individuals would be a competent party to a contract? ---------CORRECT ANSWER-----------------Graciella, a 28-year-old unemployed parolee Individuals are considered competent parties if they have reached the age of majority (not a minor) and are of sound mind (free of mental illness or the influence of anything that impairs mental capacity). The risk that is directly related to leverage is called ______ risk. --------- CORRECT ANSWER-----------------Financial The more money an investor leverages (or borrows), the greater the financial risk.
With a promotional land sale agreement, who usually carries back a portion of the purchase in the form of a purchase-money mortgage or an installment contract? ---------CORRECT ANSWER-----------------Seller Usually the seller carries back a portion of the purchase in the form of a purchase-money mortgage or an installment contract. This means the seller retains legal ownership of the land until the contract terms are satisfied. Connor was the seller and Duke was the buyer when Connor sold his property. Who conveyed the title? ---------CORRECT ANSWER----------------
- Connor, as grantor Which type of real estate investment trust is designed to deal exclusively in equities? ---------CORRECT ANSWER-----------------Equity REIT Dom, the owner of a single-lot investment, has decided to lease his property. What happens if the tenant makes improvements to the property, and then decides not to renew the lease when it expires? --------- CORRECT ANSWER-----------------The improvements belong to Dom. ______ taxes are a reliable source of income for the state because they are difficult to conceal, their value tends to remain relatively steady, and people tend to pay them. ---------CORRECT ANSWER-----------------property What does income shelter mean? ---------CORRECT ANSWER----------------
- It means that the income received is sheltered from taxation.
A percentage lease is one in which a tenant pays a base rent plus a percentage of gross sales. This is most common with retail tenants. Which one of the following characteristics makes property taxes a reliable target for taxation? ---------CORRECT ANSWER-----------------They have a high compliance rate. One characteristic that makes property taxes a reliable target for taxation is that they have a high compliance rate (that is, people tend to pay their property taxes). They are also hard to conceal, hold their value, and have low collection costs. What could discolored soil, soft spots, or mounds on the land indicate? ----- ----CORRECT ANSWER-----------------Former waste disposal site Which class of office building is aimed at tenants requiring functional space at below-average rents for the area? ---------CORRECT ANSWER------------- ----Class C Class C office buildings command below-average rates for the area. They're functional, but not prestigious. With a triple net lease, the tenant pays _______ separately from the base rent. ---------CORRECT ANSWER-----------------Taxes, insurance, and maintenance When two very similar properties are for sale in the same neighborhood, which one will sell first according to the principle of substitution? --------- CORRECT ANSWER-----------------The lower priced home
To protect themselves from liability, it's a good idea for property managers to ______. ---------CORRECT ANSWER-----------------Stay up to date on local landlord-tenant laws According to the International Council for Shopping Centers, which commercial property comprises only 1% of the retail industry? --------- CORRECT ANSWER-----------------Factory outlet Which payment plan consists of the borrower paying a constant amount made up of principal and interest on a periodic basis (usually monthly)? ---- -----CORRECT ANSWER-----------------Fully amortized loan payment plan Why are many middle-income cooperatives converted to condominiums? -- -------CORRECT ANSWER-----------------To make resale easier What type of lease is used most often with community shopping centers? -- -------CORRECT ANSWER-----------------percentage Property taxes generate approximately ______ of local government revenue. ---------CORRECT ANSWER-----------------one third (1/3) Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays
Which clause in a commercial lease determines how the tenant may use the space? ---------CORRECT ANSWER-----------------Use The element of a deed that signifies the grantor's intention to transfer title to the grantee is the ______. ---------CORRECT ANSWER-----------------Act of conveyance Lyn runs a brokerage and maintains a master file for all the office transactions. The file must be maintained for how long? ---------CORRECT ANSWER-----------------As long as Lyn's state requires All files must be maintained on state law requirements. Milo is interested in converting his rental properties into condominiums. He's completed his feasibility study and determined that the conversion costs will pay for themselves at sale time and the market will support the conversion. What else does Milo need to do prior to conversion? --------- CORRECT ANSWER-----------------Make certain the conversion will be allowed by the local government Ricky Nubbins is three months behind in his rent and has received several reminders from the landlord that the rent is past due. As a result, the landlord has begun working through proper channels to legally end Ricky's lease before the contract end date. The landlord is terminating his lease through ______. ---------CORRECT ANSWER-----------------Eviction If you and a sibling both inherited your father's property when he died, what type of deed would you need to get from your sibling in order to be the sole
owner of the property? ---------CORRECT ANSWER-----------------Quitclaim deed What is the name of the tenant group that, along with the property manager, is responsible for regional shopping center promotional activities? ---------CORRECT ANSWER-----------------Merchants' association Quentin is a victim of fair housing discrimination who is seeking redress in federal court. What is the limit on the amount of punitive damages he may be awarded? ---------CORRECT ANSWER-----------------There is no limit Which of the following is a passive type of real estate investment? --------- CORRECT ANSWER-----------------limited partnership Which statement best describes an amortized loan? ---------CORRECT ANSWER-----------------Debt that is paid off by making periodic payments consisting of interest and principal With an amortized loan, the principal is paid down over the life of the loan according to an amortization schedule, typically through equal payments. Kristoff got a bit behind on his mortgage and missed several payments. He and his lender devised a schedule that gives Kristoff an opportunity to make up those delinquent payments. What is this an example of? --------- CORRECT ANSWER-----------------Repayment plan Kali's good at bargaining. She's willing to concede some things in order to entice a new tenant into taking one of the rental spaces in the mall, but she
An investor who owns three or fewer single-family homes, and who doesn't use real estate licensees to assist in the sale of the investment properties is exempt from fair housing laws. If a minor enters into a contract with an adult, which of the following is true? ---------CORRECT ANSWER-----------------The minor may legally hold the adult to the contract, but the adult cannot legally hold the minor to the contract. Deidra wants to invest in a super-regional shopping center. What size trade area can she plan to service? ---------CORRECT ANSWER----------------- Five to 25 miles Which of the following statements about an office condo owner's responsibilities is true? ---------CORRECT ANSWER-----------------The owner is responsible for paying the PITI. An LOA of 10% means that assessments are _________. --------- CORRECT ANSWER-----------------At 10% of value Leases may be terminated by expiration, eviction, or ______. --------- CORRECT ANSWER-----------------Mutual agreement Leases may be terminated by expiration, eviction, or mutual agreement. Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf? ---------CORRECT ANSWER-----------------Represent her client's
interest in all negotiations and transactions regarding the lease of the property. Which of the following is an advantage of leasing for a single-lot investor? - --------CORRECT ANSWER-----------------Leasing gives the investor an income stream for the term of the lease. (Leasing provides the investor with an income stream for the term of the lease. The investor may also use a long-term lease as collateral to get financing for additional investments.) In commercial lease agreements, tenants pay the owner in exchange for ______. ---------CORRECT ANSWER-----------------The right to operate their business on the property Which of the following organizations is temporary in nature? --------- CORRECT ANSWER-----------------Joint venture Which of the following could indicate an underground storage tank is present? ---------CORRECT ANSWER-----------------Pipe or vent sticking out of the ground Which special lease clause stipulates that the tenant is responsible for paying any increase in taxes over the base year's taxes, in addition to the base rent? ---------CORRECT ANSWER-----------------Tax What is maximum equity? ---------CORRECT ANSWER-----------------The maximum amount the borrower is willing/able to invest
The three general groups of international buyers that real estate professionals may encounter are those who ______, those who are looking for a vacation home for when they travel to the U.S., and those who are looking for a luxury property as an investment. ---------CORRECT ANSWER-----------------Have work visas and are looking for a home to purchase while they're in the U.S. What is the difference between operating and financial leverage? --------- CORRECT ANSWER-----------------Financial leverage ratios compare a firm's debt to assets, equity, income, etc., while operating leverage is the relationship of fixed to variable costs. Which of the following must adhere to the rules of the Securities and Exchange Commission? ---------CORRECT ANSWER----------------- Syndicates ______ is a legal action that liquidates or restructures debt. It can have a long-lasting negative impact on the borrower's ability to obtain financing. --- ------CORRECT ANSWER-----------------Bankruptcy Which individual matches borrowers with the lender and loan option that best meets their needs? ---------CORRECT ANSWER----------------- Mortgage Broker Why may a developer have to pay impact fees? ---------CORRECT ANSWER-----------------To address the burden on existing infrastructure caused by the development.
(A developer may have to pay impact fees to help pay for the increased cost of at least part of the increased municipal services caused by the development.) Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately? --------- CORRECT ANSWER-----------------Net (A net lease is one in which the tenant pays some extra expenses—such as taxes, maintenance, or insurance—for the property.) The capitalization process uses a capitalization rate, which is based on what? ---------CORRECT ANSWER-----------------The performance of comparable properties A professional, on-site measurement of the lot lines and dimensions of a property is known as ______. ---------CORRECT ANSWER----------------- survey There are three types of international buyers: those who have work visas and are looking for a home to purchase while they're in the U.S., those who are looking for a vacation home in the U.S., and those who are looking for ______. ---------CORRECT ANSWER-----------------A luxury home to purchase as an investment A land banker holds improved land in ___________. ---------CORRECT ANSWER-----------------Inventory
