Question 1 of 14

For context, please first give us some insight into your primary role as it relates to your motivation for taking this skills challenge, by completing the following sentence:

"I am (or want to be) a _______."

A

Real Estate Investor

B

Real Estate Agent

C

Commercial Lender / Mortgage Broker

D

Other / Student

Question 2 of 14

**Cap Rates**

A property is selling for $2,950,000 that has a Scheduled Gross Income of $373,000. The current vacancy is 11%, and the expenses total $178,913. What is the cap rate?

A

4.58%

B

5.19%

C

6.04%

D

Not sure

Question 3 of 14

**Loan Payoff**

An investor secured a $3,875,000 loan at 5.2% with monthly payments amortized over 30 years. Five years later, they want to sell the property and pay off the loan in full. The lender’s prepayment penalty is 3%. What is the payoff amount?

A

$3,601,045

B

$3,568,336

C

$3,675,386

D

Not sure

Question 4 of 14

**Cap Rates & Investing**

An investor acquired a 42-unit property for $6 million at a 6.0% cap rate.

During the holding period, they increased the SGI by an average of $128 per unit per month. Vacancy averages 3%. Management fees are 6% and all other operating expenses remain unchanged.

**How much appreciation did the investor create if they sell the property at a 5.75% cap rate?**

A

$1,039,845

B

$1,283,862

C

$1,552,109

D

Not sure

Question 5 of 14

**Balloon Payment**

The price of an investment property is $3,750,000. The LTV of the loan is 70% and the interest rate is 7.75% on a 30-year amortization schedule. However, the loan term is 10 years.

**What is the balloon payment?**

A

$2,290,743

B

$2,334,095

C

$2,918,223

D

Not sure

Question 6 of 14

**Real Estate Investing**

An investor bought an apartment complex five years ago for $5.25 million at a 6.5% cap rate.

They secured a 75% LTV loan at a 4.5% interest rate, with payments amortized over 30 years.

Today, the property is operating at a 9.0% cap rate based on the original acquisition price, and the investors are considering selling the property.

**What is the investor’s current return on equity?**

A

13.9%

B

17.8%

C

20.1%

D

Not sure

Question 7 of 14

**Commercial Real Estate Loans**

A commercial property has a Gross Rent Multiple of 12.2. The contract price is $2,837,720.

Expenses are 35% of Scheduled Gross Income and vacancy is 3%.

The lender’s minimum debt service coverage ratio for the loan is 1.15. Payments would be amortized over 30 yrs, and the interest rate is 5.5%.

**What is the maximum loan amount on this property?**

A

$1,840,498

B

$1,974,872

C

$2,012,998

D

Not sure

Question 8 of 14

**Mortgage Loan Terms**

The price of a property for sale is $1,200,000 and the Net Operating Income is $90,000.

The seller will carry an 80% LTV interest-only note at 6% for ten years, after which time the buyer must pay the loan off.

**After how many years will the buyer have doubled his equity from principal paydown?**

A

5.5 years

B

7.2 years

C

10 years

D

Never

E

Not sure

Question 9 of 14

**Mortgage Loans and Investing**

An investor buys a property for $4.35 million at a 6% cap rate.

They are able to secure a loan with a debt service coverage ratio of 1.25 and an interest rate of 4.75% with payments amortized over 30 years.

**What is the investor’s cash-on-cash return in the first year?**

A

5.22%

B

6.96%

C

7.48%

D

Not sure

Question 10 of 14

Mortgage Loans

The NOI of a property is $245,000 and the cap rate is 7%.

The LTV on the loan is 80%. The interest rate is 6.75%. The loan term is 7 years and the amortization is 30 years.

**What will be the balloon payment at maturity?**

A

$2,334,095

B

$2,542,049

C

$2,918,430

D

Not sure

Question 11 of 14

Mortgage Loans

An investor is buying a property for $7,000,000 at a 7.5% CAP.

The lender’s minimum debt service coverage ratio is 1.3. The amortization and term of the loan is 25 years, and the interest rate is 5.875%.

**What is the investor’s maximum loan amount?**

A

$5,285,816

B

$5,445,721

C

$5,603,392

D

Not sure

Question 12 of 14

**Investment Property Loans**

A buyer of an investment property wants a cash-on-cash return of 8% on in-place income on day one.

The property’s NOI is $502,788.

The loan obtainable is for $3,825,000 at 6.25% and a 25 year term.

**What is the most the buyer can pay?**

A

$6,125,000

B

$6,325,000

C

$6,575,000

D

Not sure

Question 13 of 14

**Cost of Capital**

An investor secures a 75% LTV loan on an investment property for sale at $4,750,000. The interest rate is 5.5%, the loan is amortized over 25 years, and the loan term is 7 years. The lender charges 2 discount points and $8500 in fees at origination.

Four years later, the investor sells the property and pays off the loan with a 2% prepayment penalty.

**What was the investor’s actual annual cost of capital on the loan?**

A

5.58%

B

6.18%

C

6.58%

D

Not sure

Question 14 of 14

**Investment Property Mortgage Loan**

A buyer is preparing to write an offer on a property for $4,500,000 and wants to put down only 20%.

The best available conventional loan provides for a 70% LTV at 7.5% interest with a 25-year amortization.

The buyer asks that the seller carry an interest-only 2nd trust deed for the difference.

The lender’s debt service coverage requires that the total combined payments not exceed $26,650 per month.

**What is the maximum the interest rate the seller could charge on the 2nd Lien to keep the buyer’s total monthly payment at $26,650?**

A

7.99%

B

8.49%

C

8.99%

D

Not sure