26. As a prudent investor selling your property, which CAP rate would you prefer

Question

26. As a prudent investor selling your property, which CAP rate would you prefer to obtain the a) b) c) d) highest selling price? 1% .09% 99% 150% Not enough information e) 27. Which GRM below appears to have the lowest cash flow and most likely the lowest neighborhood risk and highest appreciation potential? a) 3 c) 5.7 d) 8 e) GRM cannot be used to measure potential cash flow or risk 28. Any note receivable payments on the profitable sale of a real estate asset includes on each payment, received over time? (Most correct answer): a) Return on investment, return of investment and interest which is all taxable to the IRS b) Return on investment which is a capital gains event c) Return on investment t in the form of taxable interest at ordinary tax rates+ capital gains d) Return on investment which is capital gain and interest which is ordinary income and taxed accordingly and return of investment which is tax free income All or none of the above e) 29. The best guess long-term capital gains rate for 2017 which apply generally to property held more than 1 year is, in addition, to Obama Health Care Tax of about 2.8%. 20% 21% 39.5% 29% a) b) c) d) e) 42% 30. On a 2017 Tax Free Exchange (1031 Exchange) what two (2) numbers correlate? a) 365+1 day b) 45/180 days c) Ordinary Income Tax Rate/Long Term CAP Gains Tax d) 27.5/39 e) None of the above 31. The NOI of a property includes consideration of: a) Depreciation b) Debt service c) Tax benefits d) B and C only e) None of the above

Explanation / Answer

26. Cap rate = NOI/present value

no information is given for either NOI or present value. So The option will be E.There is no enough information.

27. GRM = Purchase Price / Gross Scheduled Income

If a property sold for $360,000 and the gross scheduled annual rents were $36,000 ($3,000 per month), then the GRM would be 10. Higher the GRM, lower the cashflow and, higher the appeciation.

so option D=8 would be the best solution among the options.

28. Any note receivable payments on the profitable sale of the real estate asset inclueds option D that is, ROI which is capital gain and interest which is ordinary income and taxed accordingly And ROI which is a tax free income.

29. The best guess capital gain rate for 2017 which apply generally to property held more than 1 year is nearlt 30% in addition to obama health care tax of about 2.8%. So the best option should be option D=29%.

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