CMPS - Certified Mortgage Planning Specialist Real Estate Investment Planning Questions and Answers

Question 1

A client is selling an investment property and wants to defer capital gains taxes.
They plan to use the proceeds to purchase a new investment property.
To comply with IRC Section 1031, what is the maximum number of days the client has from the closing of the relinquished property to close on the acquisition of the replacement property?

Accepted Answer

180 days

Answer

45 days

Answer

90 days

Answer

365 days

Question 2

A real estate investor is analyzing a property with a Net Operating Income (NOI) of $80,000 and a current market value of $1,000,000. What is the capitalization rate (cap rate) for this property?

Accepted Answer

8%

Answer

6%

Answer

10%

Answer

12.5%

Question 3

Which of the following best describes a primary advantage for a borrower who obtains a non-recourse loan for an investment property?

Accepted Answer

The lender can only seize the specific property as collateral in case of default.

Answer

They typically come with lower interest rates and fees.

Answer

They are easier to qualify for with less stringent underwriting.

Answer

The loan-to-value (LTV) ratios are generally higher than recourse loans.

Question 4

A CMPS is advising a client on purchasing a small apartment building. The property has a potential gross income of $120,000. A vacancy and collection loss of 7% is anticipated. Total operating expenses, excluding mortgage payments, are $44,000. What is the property's Net Operating Income (NOI)?

Accepted Answer

$67,600

Answer

$76,000

Answer

$111,600

Answer

$71,880

Question 5

When structuring a 1031 tax-deferred exchange, the 'like-kind' requirement means that the replacement property must be which of the following?

Accepted Answer

Held for investment or for productive use in a trade or business.

Answer

The same type of property (e.g., an apartment building for an apartment building).

Answer

Of equal or greater physical size and number of units.

Answer

Located in the same state as the relinquished property.

Question 6

A client is considering two investment properties. Property A has a high capitalization rate, while Property B has a low capitalization rate. From a risk and return perspective, which of the following is most likely true?

Accepted Answer

Property A is likely perceived as having higher risk and higher potential return.

Answer

Property B is likely perceived as having higher risk and lower potential return.

Answer

Property A is likely a more stable, mature investment.

Answer

Both properties offer identical risk-adjusted returns.